Ireka ...Nov09

IREKA Corp Bhd’s growth driver may come from either a real estate investment trust (REIT) or expansion of its development management services to other property markets.

Until it finalises its options, the construction group is now on an asset-light operations mode, keeping its balance sheet lean.

Incorporated in 1967 by Lai Siew Wah, Lai’s father, Ireka’s core businesses are construction, property development, hospitality & leisure and information technology.

It is not looking for new business opportunities for now (Nov 2009) but does not discount the possibility of launching a REIT when the time is right.

Its current asset-light business model was adopted when Ireka was restructured to cut its gearing after the 1997 financial crisis. It shed its weight among others by listing in London Aseana Properties Ltd where it holds a 23 per cent stake. It also sold The Westin Kuala Lumpur to an international investment firm and its entire property portfolio to Aseana to focus on construction.

The de-gearing move was also to diversify risks. Under the asset-light model, Ireka, through its wholly-owned unit Ireka Development Management (IDM) Sdn Bhd, is responsible for implementing the real estate investment strategy for Aseana.

IDM’s role as a development manager includes engaging, managing and coordinating third parties in relation to the development or management of properties and leading the negotiation for the acquisition, disposal or financing of real estate assets.

On plans to go international, Ireka will remain focused on Malaysia and Vietnam, where it is exploring infrastructure-related projects.

It does not rule out the possibility of looking into other Asian countries in the future.

Its construction arm, Ireka Engineering & Construction (IEC) Sdn Bhd, will remain the biggest contributor to its net profit and revenue.

IEC has three projects in hand, namely SENI Mont' Kiara and one Mont' Kiara in Kuala Lumpur and Sandakan Harbour Square with outstanding works of RM650 million.

It may get more jobs next year as Ireka has been pre-qualified to bid for more than RM2.5 billion worth of infrastructure and building construction projects.