Khazanah Nasional Bhd, the state-controlled investment arm, and Boustead Holdings Bhd will be teaming up with Mexican theme park operator, KidZania, to build a theme park in the Klang Valley.

Khazanah and Boustead are looking to sign the development deal next week and seem likely to take up substantial stakes in the project.

Although the exact location for the theme park is unknown, sources say it could be around Mutiara Damansara, where Boustead has existing developments.  

According to Boustead’s latest annual report, properties under the group in Mutiara Damansara include 18ha of development land, a few office buildings and The Curve shopping centre.

KidZania, which targets children from the ages of 2 to 14, is based on replicas of a real city, enabling children to gain an understanding of the adult world by experiencing up to 70 different professions. The company was founded by CEO Xavier Lopez Ancona.

The first KidZania theme park opened in 1999 in Mexico City. There are five other KidZania parks — in Monterrey and Sante Fe in the US, Tokyo and Koshien in Japan, and Jakarta in Indonesia. More are scheduled to open in Dubai, Lisbon, Barcelona, Santiago and Seoul in the near future.

According to a news report, the parent company has ambitious expansion plans this year, with ongoing negotiations with local partners in Chile, China, India, and Turkey for facilities to be opened in 2010.
The project value of KidZania in Malaysia is unknown, but judging by the response in other cities, it could be a lucrative proposition for the companies involved.

According to its website, the theme park in Mexico drew some 760,000 visitors in its first year, while its facility in Tokyo, which is operated by Kids City Japan, is expected to have seen some 915,000 visitors for the fiscal year ended March 31, 2009, with no sign of a decline despite the bleak economic climate.

A KidZania in Malaysia would be the second in Southeast Asia, after the first which opened in Pacific-Place Jakarta, Indonesia, in November 2007.

The theme park operator has won several awards, including Best Theme Park Worldwide Award from the Themed Entertainment Association in 2001.

The inception of this project in Malaysia could boost Boustead’s property development arm and increase the value of its properties in Mutiara Damansara.  

It could also revive Boustead’s fortunes, which have been declining. In 1QFY2009, Boustead posted a net profit of RM67.8 million on the back of RM1.2 billion in revenue, which were 66% and 33% lower, respectively, than in the previous year, largely due to lower revenue from the company’s property arm as contributions before tax declined 14%.

The counter closed unchanged at RM4.06 last Friday.

Boustead recently proposed a renounceable rights issue of up to 260.41 million shares on the basis of two rights shares for every five existing shares at RM2.80 apiece. The cash call, expected to be completed by the third quarter, may raise up to RM729 million.

Boustead will procure a written irrevocable undertaking from its substantial shareholder, Lembaga Tabung Angkatan Tentera (LTAT), to subscribe in full for its entitlement. LTAT holds a 60% stake or 387.7 million shares in Boustead.

Boustead said the funds raised from the cash call would be used for working capital, to defray expenses incurred for the proposal and to repay borrowings. Its gearing ratio is 1.2 times.  

As at March 31, 2009, the company’s cash and cash equivalents stood at RM585 million, a 13% dip from the previous  corresponding period.

For Boustead, KidZania will be its maiden venture into theme parks. For Khazanah, this would be its second foray into the business. Last year, it inked a deal with Danish theme park operator Legoland to develop an entertainment centre in Iskandar Malaysia in Johor.     

The RM750 million joint venture with Merlin Entertainments, the world’s second largest visitor attraction operator, is expected to open in 2013.

It is also understood that Khazanah could be in negotiations with other theme park companies to set up operations in Malaysia.

This article appeared in Corporate page of The Edge Malaysia, Issue 760, June 22-28, 2009