Mara reviewing participation in automotive sector?

The govt agency could shift and play a bigger role in other industries


Majlis Amanah Rakyat (Mara) is expected to re-evaluate its participation in the automotive sector after the failed attempt by UMW Holdings Bhd to acquire MBM Resources Bhd in a multibillion stake takeover.

Mara is one of the main shareholders in MBM through Med-Bumikar Mara Sdn Bhd. Presently, Mara’s involvement in the automotive sector is via its 29% stake in Med-Bumikar, which is the major shareholder in MBM.

UMW last week announced it was abandoning the RM2.56 a share offer for Med-Bumikar and its wholly owned subsidiary, Central Shore Sdn Bhd, for a 50.07% stake in MBM and a 10% equity interest in Perusahaan Otomobil Kedua Sdn Bhd (Perodua) from PNB Equity Resources Corp Sdn Bhd (PERC).

According to a government source, now could be the right time for Mara to assess its involvement in the automotive sector due to its passive involvement in dictating MBM’s future direction and the challenging environment.

The source said Mara could shift and play a bigger role in other industries.

“The role before was to catalyse the automotive sector and nurture industry development. Malaysia’s automotive industry can stand on its own and it is about time to consider the next strategy,” the source told The Malaysian Reserve (TMR).

The source, who asked for anonymity, said Mara was very passive and was not able to exert influence on MBM’s future direction despite being the largest shareholder.

“Considering the challenging environment in the automotive industry, it is time to assess Mara’s involvement in the sector,” the source added.

Mara is believed to be in favour of the UMW-MBM deal and had wanted to cash out from its investment, which would give the state-owned agency a few hundred millions.

But Med-Bumikar is also owned by other shareholders, including six families with 11% and 13% stakes.

Some of the shareholders believed the price offered by UMW was too low for their liking, dragging the proposed deal until the offer lapsed. It is not known whether changes at Permodalan Nasional Bhd (PNB), the largest shareholder in UWM, had influenced the decision to let the deal lapse.

The source said the priority now is to enhance the governance in MBM before Mara decides the next step.   

Mara declined to comment on the matter when contacted.

The source also said Mara’s focus now is on the Industrial Revolution 4.0, which is in line with the recently launched national policy called the Industry4WRD.

In the tabling of Budget 2019 last Friday, Finance Minister Lim Guan Eng reiterated that the government will focus its expenditure and investments only in strategic sectors and areas where the markets are unable to meet the needs of the people, to reduce the crowding-out effect.

Meanwhile, Wong Fay Lee of LT Wong (Holdings) Sdn Bhd, who is one of the six families, told TMR the objective is to strengthen the group’s governance and focus on long-term shareholders’ value in facing the domestic and international automotive industry’s challenges.

Another shareholder said private shareholders would just move on after the collapse of the deal.

UMW president and group CEO Badrul Feisal Abdul Rahim was reported as saying that the company has recalibrated its corporate strategy in line with its ongoing transformation efforts and will focus on improving its financial performance.

UMW had offered to buy a 10% interest in Perodua from PERC for RM417.5 million, or RM29.80 a share.

A successful bid with MBM and PERC would raise UMW’s stake in Perodua from the current 38% to 70.6%, thus giving it a tighter grip on the country’s No 1 carmaker in terms of market share.