MAHB’s privatisation reflects foreign investors confidence in local companies’ growth potential, says economist

KUALA LUMPUR, May 16 — Malaysia Airports Holdings Bhd’s (MAHB) privatisation announcement reflects a growing confidence, especially by foreign investors in local companies’ financial and growth potential, said an economist.

Putra Business School’s Master of Business Administration programme director, Associate Prof Ahmed Razman Abdul Latiff, said the announcement will positively impact on MAHB’s future financial performance and status.

“This conviction is further strengthened by Khazanah Nasional Bhd and the Employees Provident Fund’s (EPF) high offer price for the remaining MAHB shares.

“I’m sure MAHB’s board of directors and their main shareholders have performed due diligence on the best investment strategy for MAHB. One of the factors to be considered will be the impact of such investments on the national agenda and strategic assets of the nation,” he told Bernama.

Yesterday, Gateway Development Alliance and its shareholders announced a pre-conditional voluntary offer to acquire all the shares in MAHB not already owned by the consortium at an offer price of RM11.00 per share.

The consortium is led by two Malaysian government-linked investment companies — Khazanah, via its wholly owned subsidiary UEM Group Bhd, and EPF.

The consortium’s shareholders also comprised a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA) and funds managed by Global Infrastructure Partners (GIP), one of the world’s premier infrastructure investors and an experienced airport owner and manager.

The offer price of RM11 per share implies an equity value of RM18.4 billion.

As of May 14, 2024, the consortium and its parent companies in aggregate own 41.1 per cent of MAHB’s issued share capital.

On full completion of the offer, Khazanah will be increasing its ownership in MAHB from 33.2 per cent to 40 per cent, and EPF from 7.9 per cent to 30 per cent.

Collectively, Malaysian investors would own 70 per cent of MAHB while ADIA and GIP will hold the remaining 30 per cent.

On the potential risk of substantial disposal to a foreign partner, he said since the disposal to foreign partners is only 30 per cent, it will not pose any critical or material risk to the company or local shareholders.

Meanwhile, Malaysian Economic Association deputy president Professor Dr Yeah Kim Leng said the privatisation will give the company great flexibility to unlock asset values, seek new growth opportunities and respond to new challenges in a fast-changing post-Covid-19 global economic and financial landscape that is reshaping the national and regional airports industry prospects.

He said the foreign partner would have sought firm-specific advantages such as proprietary systems and know-how that add to enterprise value and future growth.

The foreign partner could also provide greater access to capital and markets, including global industry expertise.

“Importantly, given MAHB’s ownership of airports in other countries, it potentially could transform into a major global airport player with the participation of GIP. The bulk of the value creation or 70 per cent will accrue to Khazanah and EPF.

“Given the latter two’s extensive experience in international investments, it is likely that their selection of a global partner would have undergone intensive evaluation and due diligence,” he said.

Moreover, he said air travel is picking pace and competition among airports is intensifying, thus requiring continuous strategy refreshing.

“The rationale to take MAHB private appears sound and hopefully the global environment remains stable for the privatised entity to realise its long-term plan,” he added.

Research houses advise shareholders wishing to cash in their current investments in MAHB to accept the offer of RM11.00.

Hong Leong Investment Bank believes there is strong upside potential to its current target price of RM10.25, and the potential long gestation period for shareholders to realise and extract this value.

Kenanga Investment Bank Bhd said it rationalised its target price to the offer price of RM11.00 from RM9.00 and its call to accept the offer from market perform.

“Risks to our call if the consortium fails to secure a 90 per cent stake to make the privatisation mandatory,” it said. — Bernama