Rowsley buys RSP to become a "major real estate player"

Payment will be $187m in shares.

Investment firm Rowsley Ltd. has agreed to buy RSP Architects Planners & Engineers (Pte) Ltd, a leading Singapore building design and architecture practice. Under the S&P agreement with RSP, Rowsley will pay Dr Hong and four of his partners up to $187 million by issuing up to 1.25 billion Rowsley shares at $0.15 a share.

The purchase of RSP, along with the acquistion of a 9.23-hectare land in Malaysia’s Iskandar region, will allow Rowsley to aggressively expand into the real estate market.

Dr Ho Tat Kin, Chairman of Rowsley, said: “The signing of the two agreements today takes Rowsley a step nearer to turning our aspiration to become a major real estate player in the Iskandar region, into reality. RSP, with its sterling track record in urban redevelopment will, no doubt, play a key role in driving Rowsley’s future growth strategy.

The maximum purchase price of $187 million works out to a price-toearnings ratio of approximately 7.5 times using average annual profit after tax under earn-out targets from financial years ending 31/12/2013 to 31/12/2015. The price took into account, among others, the profitability and track records of the Proforma RSP Group, its pipeline projects, brand name and competitive strengths, and after arm’s length negotiations between Rowsley and the RSP vendors comprising Dr Hong, who owns 64.5% of RSP, and other partners namely Messrs Lee Kut Cheung, Lai Huen Poh, Liu Thai Ker, and Hud Abu Bakar.

The maximum RSP purchase price comprises two components: $131million for the entire issued share capital of RSP, payable by Rowsley shares upon completion, and up to $56 million in “earn-out consideration” payable by Rowsley shares when the Proforma RSP Group achieves consolidated accumulative net profit after tax totalling $75 million for financial years ending 31/12/2013 to 31/12/2015.

Dr Hong added: “RSP looks forward to being part of a development group that will provide our architects, engineers and planners with a strong pipeline of projects in markets outside Singapore. The public listing through Rowsley will also give RSP greater visibility and access to the capital markets.”

RSP, one of Singapore’s oldest architect firms, started out as a partnership known as Raglan Squire and Partners in 1956.

Since then, it has grown in scope and scale to become one of the largest and most established practices in Asia, claims Rowsley in its release, employing 1,000 people in many countries including Singapore, China, Vietnam, U.A.E. and Africa.

Among its recent projects in Singapore are Bishopgate Residences, the new extension of Plaza Singapura, ITE Headquarters and College Central, and The Wharf Residences.