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Frontier Capital takes Sri Lanka’s Hybrid Homes to Malaysia

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Vice President - Equity Analytics
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Leading Boutique Investment house and diversified investment holding company Frontier Capital Partners Ltd that co-founded construction company Hybrid Homes specialised in container conversions and eco-friendly housing solutions in Sri Lanka has facilitated the expansion of Hybrid Homes footprint to Malaysia by setting up its Malaysian subsidiary Hybrid Homes (Malaysia) Sdn Bhd.

Hybrid Homes since its inception in 2012 has been one of the fastest growing brands in the Sri Lanka and Frontier Capital Partners being one of its main shareholders have facilitated its expansion through combination of high end investment banking solutions that has been customised meets changing needs of the company.

As per the proposed arrangement Hybrid Homes is expected to receive Malaysian Ringgit 6 million (Rs. 240 milion) for a combination of franchise fee and equity infusion from Private equity investors in Malaysia for the placement of 15% shareholdings. As per the current arrangement Hybrid Home (Malaysia) Sdn. Bhd will be the exclusive master franchise holder for all Hybrid Homes products and solutions in Malaysia.

“As a boutique Investment Holding Company, we invest in companies that fall within our stringent investment criteria. Our investment criteria are unique and our approach is different from others in business. We invest in companies that are most strategic, innovative and diversified. Among our portfolio of investments, Hybrid Home stands out as one of the most innovative solutions. Hybrid Homes is a company that converts shipping containers into modern, luxury and eco-friendly houses and other space solutions in Sri Lanka.”

“We invested US$ 1million in Hybrid Homes and Hybrid Construction Factory just one and a half years ago and we have seen considerable growth in the company. Therefore we thought taking Hybrid Home to Malaysia would help them expand geographically and meet the increasing demand for affordable housing in Asia that has considerable growth prospects due to rising construction costs,” said Frontier Capital Partners Managing Partner Nishan Sumanadeera.

Sumanadeera said Frontier Capital intends to further fuel Hybrid Homes expansion through awarding of franchise in countries like Thailand, Indonesia, India, Maldives and New Zealand. “Company is presently in discussions with few individual and companies in respective countries and would award exclusive franchise based on expertise and financial strength of the potential Franchisee.”

“In addition to the companies proposed expansion plans, we also plan to take Hybrid Homes public by listing it on the Colombo Stock Exchange with a simultaneous listing of its subsidiary in Bursa Malaysia,” he said adding Hybrid Homes will be soon seen as listed entity.

Over Rs. 200 million foreign investments

“We are indeed very happy because being a company that has grown fast, we have been able to attract over Rs. 200 million foreign investments for a Sri Lankan homemade Brand,” Hybrid Homes Managing Director of Dharshana Fernando said.”We have now got the opportunity to penetrate in to Malaysian Housing Market with affordable housing offers,” added Fernando.

He went on to say that over the past decade, the growth of the housing construction in Malaysia has been increase dramatically and the level of urbanisation process in Malaysia is considered to be important in planning for low-cost housing needs.
“Fortunately for Hybrid Homes, there is a clear miss-match between the supply and the demand of low cost housing in Malaysia. Thus Hybrid Homes has the full potential to make an impact in the Malaysian market through the proposed franchise arrangement,” Fernando added.

While house prices in Malaysia continue to surge, In Q3 2013, Malaysia´s national house price index rose by 10.1% (7.8% in real terms) year-on-year. This year´s price rise, nationally, was only slightly lower than last year´s, which was 11.9% (10.4% in real terms). Kuala Lumpur’s house price index rose especially dramatically, with nominal prices up by 14.4% (11.9% in real terms). Kuala Lumpur has the most expensive houses in the country, with an average house price of MYR 620,758 (US$ 189,342).

It is followed by Sabah and by Selangor, with average prices of MYR 413,187 (US$ 126,030) and MYR 405,826 (US$ 123,784), according to the Valuation and Property Services Department (JPPH). House prices also surged in Johor (20.4%), Pulau Pinang (14.3%), and Negeri Sembilan (6.3%). Selangor and Perak had the lowest annual price growth at 4.3% and 3.7%, respectively.

Fernando pointed out that Malaysia has a small rental market. “Only 6% of the housing stock is in the private rental sector. About 85% of total stock is owner-occupied, while government-provided housing accounts for 7% of the stock,” he said.

The Malaysian economy slowed in 2013, expanding by 4.7%, after experiencing a 5.6% growth in 2012. According to the Department of Statistics Malaysia From 2002 to 2008, the economy enjoyed growth rates averaging 5.7%, but growth fell sharply to 1.5% in 2009, during the global financial crisis. In 2010, GDP growth bounced back, surging by 7.4%, and was followed by 5.1% growth in 2011. We believe the above factors in Malaysia will indeed make Hybrid Homes a strong housing brand making it a affordable product for Malaysian public.

Hybrid Homes is already transforming the lives of Sri Lankans who seek their own home at an affordable price with a long spanning lifetime for what they put in to as investments to build their own home. Hybrid Homes the pioneers of Hybrid Construction Technology (HCT) that converts used shipping containers to super luxury, eco-friendly houses which uses shipping containers and other recyclable materials for construction.

The construction arm of Hybrid Homes, Hybrid Construction Solutions provides an array of advantages against the conventional construction. These modular Hybrid Buildings are easy to build and costs lower than conventional buildings. Use of recycling shipping containers as the core material makes the hybrid construction technology, green and eco friendly. According ISO shipping standards a Hybrid Home have a life span of more than four decades in a better environment.

http://www.ft.lk/2014/05/12/frontier-capital-takes-sri-lankas-hybrid-homes-to-malaysia/

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