Khazanah pares down shareholding in IHH by selling 16% stake for RM8.4b to Mitsui
by ALIFAH ZAINUDDIN / TMR file pix
THE government’s plan to sell “non-critical, non-strategic” assets to chip away at its trillion-ringgit debt is now in force with IHH Healthcare Bhd’s stake sale being the first undertaken.
Sovereign wealth fund Khazanah Nasional Bhd announced yesterday it has entered into an agreement to divest 16% of its interest in IHH at RM6 per share or RM8.42 billion cash to Japan’s Mitsui & Co Ltd.
Khazanah is currently IHH’s largest shareholder and the divestment will see the fund’s shareholding in the world’s third-biggest listed healthcare operator shaved to 26.05%, while Mitsui’s stake rises to 34%, thus making it the largest shareholder in the healthcare group.
The state-owned fund is expected to utilise the proceeds from the transaction for new investments and capital requirements. The deal is set to be completed in the first quarter of 2019.
Both markets in Malaysia and Japan reacted positively to the news as Mitsui’s shares climbed as much as 1.6% in early trade in Tokyo yesterday, while IHH share price soared by 4.7% or 25 sen to RM5.50 at the close of trading on Bursa Malaysia yesterday.
Rakuten Trade Sdn Bhd VP of research Vincent Lau sees the move as a good first step taken by the government to boost liquidity in the local stock market and to bring in new investors.
“It’s a good first step and I think this will send out the right signal to the market that the government is serious in paring down its equity in GLCs (government-linked companies),” Lau told The Malaysian Reserve.
Areca Capital Sdn Bhd CEO Danny Wong Teck Meng said the government’s pledge to release more GLC shares in the local market will help boost the velocity of the stocks instead of them being tightly held by institutions.
“Partial divestment is good. The government has enough control, but there is liquidity in the market.
“As long as they have a hold of over 20%, that should be good enough,” Wong said.
Following the historic May 9 general-election win, the Pakatan Harapan government declared that it had inherited national debts and liabilities to the tune of RM1 trillion, which is more than 51% of the country’s GDP.
The abolishment of the Goods and Services Tax further means that Putrajaya needs other means to raise capital, maintain deficit targets, cut expenditure and spur growth at the same time.
In August, Prime Minister (PM) Tun Dr Mahathir Mohamad said the government is evaluating companies which it owns directly or through state-owned strategic funds like Khazanah.
Khazanah’s market capitalisation of its main 10 listed companies are valued at RM249.8 billion.
These shareholdings are largely inherited following the listing of government-owned enterprises like Tenaga Nasional Bhd, Telekom Malaysia Bhd, Malaysia Airports Holdings Bhd, CIMB Group Holdings Bhd and Axiata Group Bhd.
Finance Minister Lim Guan Eng later echoed the PM’s call, saying the new administration will consider a mix of short-term financing alternatives including issuance of sovereign debt and disposal of non-critical and non-strategic assets through stake sales, land sales and leasing of idle federal assets and buildings.