Hafary buyout returns tile distributor to founders as Hap Seng cuts debt
By accepting a cash offer of S$0.64 per share for its 50.82 per cent stake in Hafary Holdings, Malaysian building-materials group Hap Seng Consolidated claims it now has cash ‘at an attractive valuation’ and a stronger financial position. The buyer is 23 Capital, a vehicle owned by the Hafary founding family, so the business passes back to the people who run it rather than to a rival consolidator.
Hap Seng has earmarked the proceeds of the sale, put at about S$140 million, or 447 million Malaysian ringgit (about $110 million), for partial repayment of borrowings that totalled 6.9 billion ringgit at the end of 2025. It expects a gross gain of about 187.3 million ringgit, with completion before the year ends. Hafary will cease to be a subsidiary, so the 48.4 million ringgit it contributed to Hap Seng’s profit and the 19.85 million ringgit in dividends will stop flowing.
Hap Seng is giving up a steady earner to ease a large debt pile, and the debt-repayment plan may limit its negotiating leverage compared with a seller choosing its moment. The sale also closes the logic of 2015, when Hap Seng bought in as a stepping stone to expand in the region. It was then mainly upstream in building materials while Hafary was strong downstream.
Hafary chief executive Low Kok Ann controls 23 Capital with his son Low See Ching and daughter Low Bee Lan. He started the business from a single ceramic tile shop in 1980. A founder-led buyer is already inside the channel, so it has no overlapping business to rationalise and no synergy target to justify with tougher supplier terms, as a trade buyer might.
The more probable change is in who pays for growth. Hafary manufactures and trades tiles, stone, mosaic, wood-flooring, quartz tops and sanitary ware, a broad range to fund. The regional expansion that Hap Seng’s 2015 purchase was meant to support now rests on the family’s own capital and bank lines, and neither side has said whether it will continue.
Hap Seng says the price is above market and historical trading prices and at a premium to its initial cost of S$0.24 per share. It has not given the margin, nor Hafary’s earnings, net assets or share count, so the offer cannot yet be set against peer distributors. The remaining shareholders must judge whether that is enough.
Singapore’s Building and Construction Authority projects construction demand of S$47–53 billion in 2026, similar to 2025, when preliminary actual demand reached S$50.5 billion. It expects an average of between S$39 billion and S$46 billion a year from 2027 to 2030, and says demand could moderate after the one-off Changi T5 development, potentially reverting to pre-COVID levels.
For a distributor serving projects, a lower base from 2027 is the largest risk. Hap Seng banks cash before it arrives, while the family takes it on without a public parent. Delisting may make patient, counter-cyclical investment easier to defend, but it also removes a listed currency for acquisitions, and Hafary’s split between project and retail customers will decide how exposed it is.
Four things will show the deal’s real shape: the premium and whether minority shareholders accept, Hafary’s revenue split between project and retail buyers, any change in payment terms for suppliers and any investment or regional plan from the family. Contractors and suppliers should seek clarity on credit and pricing terms before relying on current arrangements. The founders’ willingness to buy suggests they value Hafary above what the listing gave it, and the published premium will show by how much.