Thursday December 10, 2009

Khazanah stakes sale will improve liquidity


This is provided the stakes are be taken up by private funds

PETALING JAYA: Khazanah Nasional Bhd’s gradual divestment of stakes in Government-linked companies (GLCs) will improve market liquidity, provided the stakes are taken up by private funds, said OSK Investment Bank.

Its research head Chris Eng told StarBiz that the stakes should be taken up by non-government funds or else it would defeat the purpose of improving liquidity.

“There’s no need for specific identification but it should be enough to know that (any purchase should not be by) another governmental fund,” he said.

The Government had this year announced that it would reduce its stakes in GLCs to increase revenue and stimulate the private sector to be the driver of the economy.

Khazanah recently pared down its stakes in several GLCs, including a disposal last month of 92.038 million shares in PLUS Expressways Bhd, bringing its stake in PLUS to 57.9%.

It had also reduced its stake in Malaysia Airports Holdings Bhd by 5% to 67.7% in September.

In a speech at Invest Malaysia 2009 Conference in July, Khazanah managing director Tan Sri Azman Mokhtar had said that judicious and timely divestments could significantly add to value creation.

“Khazanah has been gradually selling down stakes in selected and more mature counters, especially through the issuance of exchangeable bonds or sukuks.

“In this regard, in the last five years alone Khazanah has made divestments totalling RM12.6bil, locking in gains of RM3.6bil over 20 transactions,” he said.

The stake sales included Bintulu Port, Port of Tanjung Pelepas, RHB Bank, Tradewinds Hotels and Time dotcom.

“Subject to value, we expect this trend of divestment through stake sales as well as reducing our stakes in large listed GLCs to continue and accelerate over the medium term,” Azman said.

Jupiter Securities head of research Pong Teng Siew said the divestments should make the market more “investable”.

“This is a positive development, especially for the large capital stocks,” he said.

On news that Khazanah might be selling off its property and construction stakes ahead of its investments in other sectors, Pong said market conditions were condusive for Khazanah to do so.

“This is because the property market has already reached its peak and is now cooling off,” he said.

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