Government investment arm Khazanah might be relieved to get rid of its 42.7 per cent stake in Proton, but did it get a good deal in the process?
Proton has some serious baggage in the form of Lotus, which has already used some 270m pounds of a 480m-pound facility raised for its turnaround programme.
Still, some business analysts have reservations about the pricing of Khazanah’s disposal of its Proton stake to DRB-Hicom, substantially controlled by Syed Mokhtar Al-Bukhary. This excerpt from The Edge.
While minority shareholders may be happy to cash out at a gain of about 93% since November, Khazanah will be selling its assets at almost half Proton’s book value of RM9.81 net assets per share.
Khazanah will also incur a “real” loss on the disposal after having acquired its stake in Proton for roughly RM8 per share. As Malaysia’s sovereign fund, the loss is indirectly borne by the general public. At face value, the disposal translates into a loss of about half a billion ringgit.
However, Khazanah’s holding cost is understood to be in the RM5.50 band after taking into consideration Proton’s dividend payments over the years.
Nevertheless, the general consensus is that Khazanah could have wrangled for a better price.
via DRB-Hicom buys Proton at RM5.50.
The other interesting point is that, according to M Shanmugam of The Edge, the biggest endorsement for DRB-Hicom came from Mahathir. Shanmugam claims the sale of Proton to DRB-Hicom was a done deal from the start, through no fault of Khazanah’s. The restricted competitive bidding system meant that only local companies that a majority owned by bumiputeras were invited, he said. “It’s the flawed system that picked the winner.” Only DRB-Hicom could show proof of funding by the 16 January 2012 deadline.
So what we get at the end of the day is one familiar name cropping up whenever there is a major asset divestment by Khazanah on a restricted competitive bidding basis – Tan Sri Syed Mokhtar Al-Bukhary. Concentration of wealth in one particular group is not healthy. But the way major asset disposals are being done, its seems like only one bumiputera group with financial muscle will come out on top.
Is this what you mean by Economic Transformation Programme?