PNB moves for another big merger

Permodalan Nasional Bhd (PNB), a state-run fund manager, is creating a large property group with yearly revenue of RM1.3 billion by combining three property companies under one roof, sources said.

The merger of Island & Peninsular Bhd, Pelangi Bhd and Petaling Garden Bhd will help PNB to squeeze more profits from a leaner organisation.It expects to complete the deal next month."It is slightly delayed from March.

The idea, as always, is to create more value," said a source familiar with the deal. He declined to be identified because the information is confidential.This would probably be the second such mega merger under the PNB group of companies.

In 2007, it completed the merger between Sime Darby Bhd, Golden Hope Plantations Bhd and Kumpulan Guthrie Bhd to create the world's largest listed plantation group.

Based on information from the Companies Commission of Malaysia, the merged entity would have revenue of RM1.31 billion for 2007.This equals SP Setia Bhd, Malaysia's most valuable property developer, which made RM1.33 billion revenue in financial year 2008.

PNB has already set up a new company, PNB Property Holdings, to handle the merger, which is being done virtually out of sight as all three companies have been taken private.However, the merger could pave the way for an initial public offering for the new property group when the economy recovers.Malaysia's property market is facing weak demand due to the global economic downturn.Regroup Associates Sdn Bhd, a property consultant, expects the market to take about three years to recover from its current slump.The government unveiled a bigger-than-expected stimulus package of RM60 billion last Tuesday to prevent the country from falling into a recession.It also cut its economic growth forecast for the second time. Malaysia's gross domestic product, the sum of all goods and services produced, could grow 1 per cent, or fall 1 per cent, this year.The government had earlier predicted 3.5 per cent growth