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NEWS UPDATES 15 September 2009

Malaysian govt holding firm to trim stakes in GLCs

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Malaysia’s government holding company Khazanah Nasional Bhd is expected to reduce stakes in more government-linked companies (GLCs) after selling off 55 million shares, or 5 percent, in Malaysia Airports Holdings Bhd (MAHB) last week to unidentified institutional investors, according to a report in local business daily Starbiz.

The government-linked investment arm might be looking to divest stakes in companies that it owned more than 60 percent, the daily quoted OSK Investment Bank research head Chris Eng as saying.

It said UOB KayHian head of research Vincent Khoo shared similar views, saying that the sell-down in MAHB’s was “unique” as Khazanah used to own more than 70 percent in the company.

“The next possibilities would be those in which it has over 50 percent stakes, which only consist of a few companies (see chart),” he was quoted as telling StarBiz.

“Khazanah doesn’t need the funds. It’s in line with the government’s call to free up more liquidity to attract foreign investors,” Khoo said, adding that the sale proceeds, nonetheless, could be pumped into Iskandar Malaysia.

TA Securities head of research Kaladher Govindan, meanwhile, said Time dotCom Bhd and Proton Holdings Bhd could be next as “Khazanah has always talked about divesting its interest in these companies.”

The reduction in shareholding should not have an impact on the transformation programme that the GLCs were undergoing since Khazanah still owned substantial stakes, he said.

“As long as Khazanah maintains its position as one of the key shareholders, it should not be an issue,” Govindan said. Eng concurred, adding that Khazanah could still retain control as long as it had board representation in the companies.

“The 5 percent selldown in MAHB is (of) no impact. What is 5 percent when its stake was over 70 percent?” he said, adding with the sales proceeds, Khazanah could boost its exposure in the services and high technology sectors.

Govindan, in contrast, expects Khazanah to tap offshore opportunities especially since asset classes in the US and Europe remain at low levels.


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