Wednesday, August 1st, 2018
HANOI, Aug 1 — Vietnam will limit its devaluation of its dong currency at 2 per cent this year and stick to its macroeconomic targets despite a slide in the yuan and a trade war between China and the US, its top trading partners, the prime…
PETALING JAYA: Merger and acquisition (M&A) activity in Malaysia is expected to remain robust this year, especially when more firms are looking for M&As than opting for the initial public offering (IPO) market, according to management consulting firm Bain & Co's financial investors and M&A practice leader Suvir Varma.
“The IPO market has not been as robust as we have seen in the past … but we're still seeing healthy domestic M&As. The strategic investors would just buy directly into these attractive assets and don't need to go to the public market to get liquidity or raise money,” he said at a media briefing on “Opportunity or Curse: Winning in the New Age of M&A in Southeast Asia”today.
Last year, Malaysia was the second most active market for M&As in the Southeast Asia region after Singapore.
However, Suvir said valuations are not cheap in Malaysia and that the merged entities must integrate well to drive maximum returns. As at end-2017, Malaysian listed companies had a cash pile of US$85 billion (RM340 billion).
In Malaysia, Suvir said, private equity (PE) firms were less active last year as well as the first half of 2018 given that more investments were made in the neighbouring countries. Some of the key focus areas for PE firms include consumer, technology, internet and e-commerce.
“PE firms are looking at attractive companies and stability in policies … I expect PE firms to start a hard look at Malaysia again in the precision engineering space. Malaysia has lots of good companies, it is just that the people did not act on it when the election was going on.”
Corporate M&As, however, remain robust in Malaysia with local corporates heavily focusing on domestic deals. The traditional industrial goods and services segment is still the key area, accounting for 50% of deal flows.
Meanwhile, Bain & Co's Malaysia country head Francesco Cigala foresees local M&As continuing to be driven by large conglomerates this year.
Commenting on foreign funds' sentiments, Suvir said foreign investors are cautiously optimistic on Malaysia as there is more certainty in the government policies.
“Cautious is because nobody wants to be on the front foot to commit a large amount of capital until the dust settles. For optimism, the signals are encouraging … there appears to be some certainty around what the next several years are going to look like. They can see types of people that are being brought in, like Tan Sri Zeti Akhtar Aziz, Tan Sri Hassan Marican who have very reputable global profiles.”
Besides the two Asian giants China and India, Suvir said, Asean, including Malaysia, has emerged as one of the rising stars in the eyes of investors.
“Now they realise not only China and India in Asia, and the bloc is finally getting the attention that it deserves,” he added.
PETALING JAYA: DRB Hicom Bhd is selling profitable Alam Flora Sdn Bhd to Malakoff Corp Bhd's dormant unit Tunas Pancar Sdn Bhd for RM944.6 million to pay off loans and finance loss-making Proton Holdings Bhd's operations.
Alam Flora holds a 22-year concession for solid waste collection and public cleansing management awarded by the Malaysian government, which runs through Sept 1, 2011 until Sept 1, 2033.
The deal comes with a commitment from DRB-Hicom to cover a shortfall of up to RM140 million, over a two-year period, in the profit before tax of Alam Flora, should there be any tariff reduction in the concession agreement within 24 months of the sale to Tunas Pancar.
Tan Sri Syed Mokhtar Al-Bukhary holds a direct interest in DRB-Hicom and an indirect interest in Malakoff.
In a filing with Bursa Malaysia today, DRB-Hicom said for the financial year ended March 31, 2018, the Alam Flora group contributed RM813 million or 6.4% of DRB-Hicom group revenue and 19.4% or RM99.4 million to profit after tax. The proposed disposal will give rise to a net gain of RM735.4 million.
DRB-Hicom intends to use RM500 million to pay off Islamic medium-term notes and term loans which will not result in interest savings for the group, while the remaining RM44.60 million will be for Proton's development costs for new models as well as any future investment opportunities to be identified.
As at March 31, 2018, the borrowings of DRB-Hicom Group totalled RM5.78 billion.
“There can be no assurance that the use of part of the proceeds for these investment purposes will generate sufficient returns to offset the loss in income stream following the completion of the proposed disposal,” DRB-Hicom said.
PETALING JAYA: Boustead Plantations Bhd is acquiring oil palm plantation land measuring 4,915.25ha in Sabah together with a palm oil mill, buildings erected, movable assets, machinery and vehicles for RM397 million cash.
The group told Bursa Malaysia that its wholly owned subsidiary Boustead Rimba Nilai Sdn Bhd entered into a sale and purchase agreement today with the vendors for the acquisition.
Boustead Plantation said the purchase sum represents a premium of RM3.7 million or 0.94% over the market value of the plantation assets, excluding a workshop and building materials located on one piece of the plantation land.
It intends to finance the proposed acquisition with internally generated funds (RM47 million) and bank borrowings (RM350 million).
The average production of fresh fruit bunches for the land stood at 5.81 metric tons per acre for the financial year ended April 30, 2017. Its plantation profit grew 31% to RM16.65 million for the same period against RM12.71 million a year ago.
Boustead Plantations said the acquisition represents a move to replace some of the group’s plantation land in Peninsular Malaysia which was disposed of in recent years with sizeable plantation land in Sabah at a lower cost.
“This is in view of the rapid developments in Peninsular Malaysia which have resulted in land being less viable for plantation activities.”
This strategy also presents the group with the opportunity to improve its income over the long term for its future growth, it said.
Upon completion of the proposed acquisition, Boustead Plantations’ total plantation landbank will increase about 5% from 93,417ha to 98,332ha, while the total oil palm planted area will rise 6% from 74,985ha to 79,427ha.
On Bursa Malaysia today, Boustead Plantations declined 1 sen or 0.8% to RM1.27 on volume of 222,600 shares.
PETALING JAYA: Petroliam Nasional Bhd (Petronas) president and group CEO Tan Sri Wan Zulkiflee Wan Ariffin has been spared the culling which left few survivors in government-linked companies, after weeks of speculation that he was to be replaced.
In a brief statement released by the Prime Minister's Office (PMO) today, Putrajaya confirmed that Wan Zulkiflee would remain in his posts at the national oil company.
The PMO also announced the appointment of Datuk Ahmad Nizam Salleh as the new chairman of Petronas' board.
Tan Sri Mohd Sidek Hassan, the former chairman, left the Petronas board in early July.
Ahmad Nizam has been working in the oil and gas industry for 37 years, and served Petronas in several positions for the majority of his career.
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NEW DELHI, Aug 1 — Nissan Motor Co and authorities in an Indian state are close to settling a dispute over which the Japanese carmaker initiated international arbitration seeking more than US$729 million in unpaid dues and damages, sources told…
FRANKFURT AM MAIN, Aug 1 — Volkswagen today reported a leap in second quarter profit thanks to strong sales, but the German car giant warned that strict new emissions tests and global trade tensions posed “great challenges” in the months…
LONDON, Aug 1 — British factories lost momentum in July and manufacturers were their most downbeat in nearly two years, a survey showed today, but the data was unlikely to deter the Bank of England from raising interest rates tomorrow. The weak…