Thursday October 14, 2010

Khazanah’s stake sale to improve market liquidity


PETALING JAYA: Khazanah Nasional Bhd’s recent disposal of 147 million shares, or a 2% stake, in CIMB Group Holdings Bhd is merely part of the sovereign wealth fund’s strategy to pare down its stakes in various government-linked companies (GLCs) to improve liquidity in the Malaysian capital market, some analysts said.

“It’s a known fact that the Government wants to reduce its direct involvement in business to enhance the local capital market’s appeal, particularly to foreign fund managers,” an analyst told StarBiz.

“The lack of free float in the local stock market has often been one of the major complaints among these investors; so by continuing to free up liquidity, we could encourage more of these investors’ participation in our stock market,” he said.

It was also acknowledged that Khazanah’s latest move (which would not be its last one) in paring down its shareholdings in GLCs is part of the Government’s strategy to encourage the private sector to take a bigger role in driving the country’s economy.

Khazanah is believed to utilise the cash to acquire new assets. However, it remains a question as to what would it be investing in.

“Certainly, Khazanah is not expected to allow its funds from the share disposals to lay idle. We believe Khazanah is reinvesting in new strategic sectors such as healthcare, leisure and tourism, among others, to enhance its own growth,” another analyst said.

Khazanah was recently entangled with India’s Fortis Healthcare for control of Singapore-based hospital chain, Parkway Holdings. It eventually won the battle for Parkway, after launching a general offer to acquire all the shares in Parkway it did not already own at S$3.95 apiece.

That acquisition was estimated to have cost Khazanah a whopping S$3.4bil (RM7.95bil), which would be funded through a combination of debt and equity.

On Wednesday, Bloomberg reported that Khazanah sold shares worth RM1.17bil in CIMB Group Holdings Bhd. The report quoted sources as saying that Khazanah sold its shares through UBS AG at RM7.99 per share.

Khazanah currently has a 29% stake in CIMB Group after the sale of shares. Prior to that, the fund had a 28% stake in CIMB as at June 30.

Over the past one year, it had sold down stakes in Tenaga Nasional Bhd, Malaysia Airports Holdings Bhd and PLUS Expressways Bhd.

In March, Khazanah announced its plan to divest its 32.21% stake in Pos Malaysia Bhd and also invited interested parties to bid for the stake.

Last week, Khazanah said the Government had received MMC Corp Bhd’s bid to acquire UEM Group Bhd.

In July, it sold its 178.9 million shares, or 5%, in Telekom Malaysia Bhd, for RM581.3mil.

CIMB : [Stock Watch] [News]

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