SilTerra disposal kicks off Khazanah’s divestment in 2021

The semiconductor wafer foundry deal could be worth about RM610.5m, Bloomberg reports

by PRIYA VASU / source

KHAZANAH Nasional Bhd has accepted Dagang NeXchange Bhd (DNeX)-led consortium’s bid to acquire its wholly owned SilTerra Malaysia Sdn Bhd, in a move to rebalance its portfolio via active non-core assets disposals.

The proposed deal marks the first major divestment for the state-owned fund this year. Value of the deal was not disclosed pending a definitive agreement but Bloomberg reported the deal could be worth about US$150 million (RM610.5 million).

Last week, Khazanah’s 35%- owned associate Parkway Life Real Estate Investment Trust sold a non-core industrial property in Japan known as P-Life Matsudo for ¥2.9 billion (about RM112 million) cash to a Japanese real estate investment firm, Hulic Co Ltd.

SilTerra is a 200mm semiconductor wafer foundry, offering CMOS fabrication processes for integrated circuits in advanced logic, mixed signal and radio frequency, and high voltage applications.

The loss-laden company is headquartered in Kulim, Kedah, and was established on Nov 29, 1995, as Wafer Technology Malaysia Sdn Bhd and later renamed as SilTerra Malaysia Sdn Bhd in 1999.

In 2019, SilTerra’s net profit margin decreased by 39.19%. Khazanah did not disclose proceeds made through SilTerra’s disposal.

In 2019, Khazanah made RM7.36 billion in profits, on the back of RM9.9 billion in divestment gains that helped absorb some RM4.9 billion in impairments.

Earlier this year, Khazanah faced a setback when the proposed merger between UEM Sunrise Bhd and Eco World Development Group Bhd failed.

Should the merger succeed, Khazanah’s stake will be diluted in the enlarged UEM Sunrise, via UEM Group, from 66% currently with the share swap to 43%.

Other contenders for the SilTerra bidding were Nuglobal Ventures Sdn Bhd with funding provided by Green Packet Bhd, and foreign semiconductor investors such as Taiwan-based Foxconn Technology Group and German-based X-Fab Semiconductor Found- ries AG.

For DNeX, SilTerra marks the second major investment this year following its recent acquisition of a 60% stake in Ping Petroleum Ltd for US$78 million, as part of the group’s move to strengthen its presence in the upstream oil and gas segment.

The IT service management company may nominate its wholly owned subsidiary, DNeX Energy Sdn Bhd, to be the transferee and registered holder of the shares.

DNeX, in a statement on Jan 22, noted that the proposed acquisition would be satisfied by a combination of US$40.95 million in cash, as well as the issuance of new ordinary shares in DNeX and new redeemable preference shares in DNeX Energy for the remaining US$37.05 million.

The acquisition is expected to be completed by the end of the second quarter of 2021 subject to all required approvals under the share sale and purchase agreement being obtained, it added.

DNeX shares rallied by nine sen or 32% to close at 37 sen yesterday on the SilTerra deal announcement and was the most actively traded counter on Bursa Malaysia. DNeX is now trading at 26-month highs.

Read our previous report here

DNeX wins Khazanah’s SilTerra bid