DRB-Hicom sells 11% stake in Modenas


DRB-Hicom Bhd has entered into an agreement with Japan’s Kawasaki Heavy Industries Ltd to sell 14.3 million ordinary shares, representing an 11% stake in Motosikal dan Enjin Nasional Sdn Bhd (Modenas) for RM40.3 million.

DRB-Hicom and Kawasaki hold 81% and 19% equity interests in Modenas respectively.

In a statement, DRB-Hicom said Kawasaki will raise its equity in Modenas to 30% following the acquisition.

“Kawasaki is also subscribing 52 million convertible preference shares (CPS) to be issued by Modenas. Once converted, Kawasaki’s stake in the national motorcycle company will rise to 48%.

“The CPS will be convertible subject to Modenas achieving strategic milestones agreed between the parties,” it said in the statement last week.

Meanwhile, DRB-Hicom group MD Datuk Seri Syed Faisal Albar Syed AR Albar said the new equity structure would benefit Modenas and its customers.

“Kawasaki has been a shareholder of Modenas since the inception of this brand. Even then, their products had helped Modenas chart a leading position in the domestic two-wheeler market.

“Kawasaki’s larger equity in Modenas also means they will actively participate in the running of the operations at Modenas, instead of merely being a shareholder.

“(As such,) I believe that it will augur a vibrant phase of customer driven products for Modenas especially in the street bike and sports bike segments,” he said.

Syed Faisal Albar added that the existing relationship with Kawasaki would enable both parties to work more efficiently as they develop products for the local market, and that the popularity of their key products in Malaysia will be a boost for Modenas.

“With both Kawasaki and Modenas not strangers to each other, the synergy between the two groups should ensure that they are able to work efficiently as they develop localised products for the domestic market.

“Malaysians have always had a strong affection for Kawasaki’s products, being a quality global and established brand with a strong racing heritage,” he said.

Modenas and Kawasaki have had a long and successful relationship, beginning with the former’s incorporation in 1995.

Apart from motorbikes, Modenas also undertakes components machining for Kawasaki. The production facility is located in Gurun, Kedah, and has a production capacity of 130,000 units annually.

Modenas’ early products were based on the Kawasaki range of mopeds and cruisers. One of their most famous models is the Jaguh, which was a 125cc cruiser based on the Kawasaki Eliminator 125, while their most successful model in the early years was the Kriss 110.

DRB-Hicom closed three sen or 1.33% lower at RM2.22 last Friday, with a RM4.29 billion market capitalisation.