Tan Sri Syed Mokhtar Al-Bukhary is once again making waves in the corporate sector. In late 2009, Tradewinds (M) Bhd, one of his vehicles, acquired a 31.5% stake in the country’s sole rice distributor Padiberas Nasional Bhd (Bernas). Earlier this year, his DRB-Hicom Bhd received a letter of intent from the government to provide armoured personnel carriers in a contract that could be worth some RM8 billion.

The tycoon may yet pull off a major coup if his flagship company MMC Corp Bhd, and its partner Gamuda Bhd, are given the mandate to construct the country’s mass rapid transit (MRT) project. The MMC-Gamuda partnership is one of the front runners in the bidding for the RM36 billion project. It will be the largest construction job to be awarded under the 10th Malaysia Plan (10MP). 

Other relatively large jobs and mergers and acquisitions had led up to this event. In April this year, DRB-Hicom’s wholly-owned unit, Defence Technologies Sdn Bhd, received a letter of intent from the government to develop, manufacture, supply and deliver 12 variants of the Malaysian AV-8 armoured wheeled vehicle.

Syed Mokhtar is the controlling shareholder of DRB-Hicom via Etika Strategi Sdn Bhd, which has 55.9% equity interest in the diversified company.

Defence contracts involve national security, which in turn means the government has to be comfortable with both Syed Mokhtar and DRB-Hicom to award it such an important job.      

Late last year, Tradewinds concluded the acquisition of Hong Kong-based Wang Tak Co Ltd’s 31.5% in rice distributor Bernas. Wang Tak is a company linked to IGB Group Bhd, whose patriarch is Datuk Tan Chin Nam. Although the acquisition price of RM2.08 a share was fair, Wang Tak is understood to have been a reluctant seller.

This acquisition gave Syed Mokhtar’s Tradewinds control over Bernas, which has a monopoly on rice distribution in the country. Other than Wang Tak’s equity interest, Tradewinds acquired related party Gandingan Bersepadu Sdn Bhd’s 22.2% stake as well. Gandingan Bersepadu is a private company controlled by Syed Mokhtar.    

The business magnate’s return to the limelight comes on the back of a few lacklustre years, when he and his slew of companies fell out of favour.

Coming out of a bad patch
Syed Mokhtar has been resilient despite the changes at the helm of the country. 

“He surfaced during the premiership of Tun Dr Mahathir Mohamed and created waves, stayed through Tun Abdullah Ahmad Badawi’s term, albeit with less fanfare, and now he appears to be an important corporate figure in Prime Minister Datuk Seri Najib Razak’s tenure,” observes an Umno politician.

Things have not always been rosy for the tycoon. In December 2007, word had it that Syed Mokhtar was not in the best of financial health.

At one point, because of the high debt levels in his group of companies — estimated at some RM30 billion — there was concern that if the debt problem got out of control it could weigh Corporate Malaysia down. Much of the debt was linked to independent power producer Malakoff Bhd, a unit of MMC. Malakoff had borrowings of some RM15 billion at the time.

The period of turmoil was mostly during the early part of the Abdullah administration, which started in November 2003. The newly appointed prime minister scuttled the award of the RM14.5 billion double-tracking rail job to MMC and partner Gamuda and shelved a proposal by Syed Mokhtar to build a US$2 billion aluminium smelter in Sarawak, which would utilise electricity from the 2,400mw Bakun dam.

Slowly but surely, Syed Mokhtar has clawed his way back onto the corporate scene.

Abdullah ended up awarding the two companies, Gamuda and MMC, the northern portion of the rail job in late 2007, for some RM12.5 billion.

Dr Mahathir was instrumental in Syed Mokhtar getting his breaks in Corporate Malaysia in 2000. That year, the shrewd businessman acquired a 19.9% stake in Malaysia Mining Corp Bhd (the predecessor of MMC Corp) from state-controlled fund Permodalan Nasional Bhd (PNB) and since then, there has been no looking back. Syed Mokhtar went on to build a massive business empire.

He is said to be well liked by Najib. Their relationship was developed via DRB-Hicom, which has its automotive plant in Pekan, Pahang, and is one of the largest employers in the town, which is in Najib’s constituency.

Syed Mokhtar’s rise to the higher echelons of Corporate Malaysia is interesting and a classic rags-to-riches tale. He had started out selling meat in the 1970s, after his father, who lost the family’s cattle business to foot and mouth disease, retired. From there, he went into the transport business with four lorry permits.

Through these businesses, many other friendships were forged. Some of them have lasted until today. In the 1970s, Syed Mokhtar won a contract to transport rice to Mara Pernas Edar and Sergam Sdn Bhd, a subsidiary of the Johor State Economic Development Corporation (Johor SEDC). The managing director of Johor SEDC then was Tan Sri Muhyddin Yassin who later became the menteri besar of Johor and is now the deputy prime minister.

Many say Syed Mokhtar’s success in Johor — his land and port concessions of Port of Tanjung Pelepas (PTP) and Johor Port in Pasir Gudang, and even Senai Airport (all parked under MMC) — was due to Muhyddin. Be that as it may, it cannot be denied that he has made PTP one of the fastest growing ports in the world.

This article appeared in Corporate page of The Edge Malaysia, Issue 810, June 14-20, 2010