Khazanah taking time to divest equity stakes

Sovereign wealth fund may be looking for ‘things to settle down’ before making a move


THE sale of government assets via sovereign wealth fund Khazanah Nasional Bhd has been progressing slowly, with the fund’s stake sale in IHH Healthcare Bhd being the only major divestment in the last six months.

The ruling Pakatan Harapan government had said it will sell “non-critical, non-strategic” assets to plug the financial hole left by the previous administration.

However, apart from Khazanah’s 16% stake divestment in Asia’s largest hospital operator in November last year, further developments at the fund are negligible.

The state-owned fund currently has shareholdings in 14 companies, valued at RM61.6 billion.

A check on Bloomberg showed that total holdings value at Khazanah has been shaved from RM84 billion to RM62.8 billion since Prime Minister Tun Dr Mahathir Mohamad was appointed to the chair in July last year.

The weak performance of the FTSE Bursa Malaysia KLCI so far is reflective of the lower value.

The benchmark index has had a weak start to 2019, trading mainly within the 1,600-point range. Last year, the index traded between a high of 1,887.75 and a low of 1,661.96.

Other than its divestment in IHH, the fund has also been reducing its stakes in banking entity CIMB Group Holdings Bhd and local integrated circuit manufacturer Key Asic Bhd, albeit marginally.

Khazanah’s shareholdings in CIMB has been reduced by about 63 million shares since the company’s last filing on Dec 4, 2018.

Its current position in the country’s third-largest bank by market capitalisation now stands at about 2.56 billion shares or 26.8%. Its shares in Key Asic is now at 93.9 million shares or 9.88%.

Khazanah has also increased its stake in Tenaga Nasional Bhd by 41 million shares to 1.64 billion and in US-based Phunware Inc by 2.21 million shares to 2.2 million. This brings Khazanah’s shareholdings in the two companies to 28.76% and 7.9% respectively since their last filings.

An equity analyst, who declined to be named, said there is no urgency for Khazanah to dispose of its assets despite the government’s public declaration that it would do so.

“The government’s idea of trimming its stakes in government- linked companies (GLCs) is to raise money.

“But if they can’t sell it at a good price, then why bother. I don’t think there is a firm timetable they’d want to adhere to,” the analyst said.

Headwinds from a tariff tussle between the US and China continue to weigh heavily on market sentiments, with uncertainties from Brexit threatening to drag down global growth even further.

Another analyst said Khazanah may be looking for “things to settle down” before making a move.

He said Khazanah could be working on terms with a strategic partner or buyer as their holdings are not small.

“It may take them some time to negotiate, if that is the case,” the analyst said.

Two weeks ago, Nomura Global Markets Research downgraded Malaysian shares from ‘Neutral’ to ‘Underweight’, premised on poor corporate earnings and concerns including the government’s continued presence in the private sector.