Problems at the runway
Problems at the runway
Malaysia's airport operator needs a strategic partner. Picking the right one is tricky.
While writing this piece, it dawned on me that Wawasan 2020 or Vision 2020 was us eking out a living while Covid-19 ran riot with Muhyiddin Yassin as prime minister. Scary. Hopefully we’ll never live long enough to undergo a repeat of such an episode.
Before I proceed, the usual plugs. I run annual and monthly subscriptions. There’s an atas tier called Founding Member where you get all the perks of an annual subscription and more, such as an annual report on how this tiny corner of the internet fared throughout the year.
I also run group subscriptions with a minimum of two at the table, if you’re mulling bulk purchases for your organisation or company.
And, in case you missed it, this was last week’s blockbuster piece, detailing the fall of Fusionex and how liquidators found that the Digital Free Trade Zone wasn’t in government hands 👇🏽
Let’s talk about the privatisation of airport operator Malaysia Airlines Holdings Bhd (MAHB). The Edge, citing data services provider Dealogic, dubbed this the country’s largest acquisition in nearly three years.
Malaysian airports sorely need upgrading. A deal like this is a longtime coming. But is it all sunshine and roses?
Four entities that form a consortium are making a bid for MAHB. They are the firm’s largest shareholders as well as Global Infrastructure Partners (GIP) and Abu Dhabi Investment Authority (ADIA).
Khazanah Nasional Bhd, the Employees Provident Fund, New York-based GIP and ADIA are offering to pay RM11 per share to own 67% of the airport operator, according to a Bursa Malaysia filing on Thursday.
The sum represents a 15% premium to MAHB’s prevailing stock valuation. The offer values the airport operator at RM18.4 billion. Just before hitting the schedule button last night, MAHB had a market capitalisation of RM16.28 billion.
By the end of the exercise, Khazanah and EPF will raise their stakes in MAHB to 40% and 30% respectively, while GIP and ADIA will own the remaining 30%, according to a statement issued by the consortium.
Collectively the consortium is known as Gateway Development Alliance Sdn Bhd (GDA). Khazanah is currently MAHB’s biggest shareholder with a 33% stake while EPF holds about 8%.
MAHB has a near-monopoly over the aviation sector. The firm operates 39 out of the 42 airports in the country. It also runs Türkiye’s Sabiha Gokcen International Airport (ISGA) in Istanbul.
The other airport operators are Senai Airport Terminal Services Sdn Bhd which runs Senai International Airport, Johor, and Kerteh Airport, Terengganu.
Senai Airport Terminal Services is controlled by tycoon Syed Mokhtar Albukhary through MMC Group. There’s also Tanjung Manis Development Sdn Bhd that operates Tanjung Manis Airport in Sarawak.
As with any deal, the proposal will require shareholders’ nod and regulatory approvals.
I’m going to cut through the hype and lay out three hurdles with this deal and why, perhaps, it should also stay listed on the Bursa Malaysia: