This article first appeared in The Edge Malaysia Weekly on December 30, 2024 - January 12, 2025

THE saga of taking Boustead Plantations Bhd (BPlant) private in 2023 is probably still fresh on investors’ minds.

It would not be wrong to say that Lembaga Tabung Angkatan Tentera (LTAT) had succeeded in taking BPlant private.

Without the takeover offer by LTAT, the minority shareholders would not have been able to enjoy such handsome returns at RM1.55 per share, considering the plantation stock had never climbed above RM1 since it was listed in 2014.

It was challenging for LTAT to undertake such an exercise within a year of taking Boustead Holdings Bhd private, on its own. The government extended a financial guarantee of RM2 billion for the takeover bid. Wouldn’t this be considered a happy ending? The politicians who opposed the initial takeover bid by Kuala Lumpur Kepong Bhd (KL:KLK) and LTAT, would likely agree.

But was the ultimate goal achieved as LTAT and the ailing Boustead Holdings are still carrying the baby — underperforming estates that needs money for replanting? Had LTAT stuck to the original plan, it would have received RM1.15 billion by selling 33% BPlant stake to KLK.

This year, another government-linked company, Malaysia Airports Holdings Bhd (KL:AIRPORT), is being privatised. The first closing date  of takeover offer of RM11 per share is on Jan 8.

After what happened with KLK and LTAT, no one will rule out the possibility that the deal might fall through.

The privatisation deal also ignited parliamentary debate and the backlash is probably stronger compared with the BPlant deal.

The contention is that a member of the consortium that made the takeover bid, Global Infrastructure Partners (GIP), is a unit of BlackRock Inc. One of the founders of BlackRock is said to be pro-Zionist.

This issue was amplified against the backdrop of escalating military tensions in Gaza then. Again, the straightforward corporate exercise was being evaluated from a different perspective, not just in dollars and cents.

MAHB’s share price slid to a low of RM9.60 after the news of privatisation, reflecting the scepticism in the market, partly due to the fate of the BPlant deal.

To recap, Khazanah Nasional Bhd has formed a four-member consortium to make a voluntary takeover offer to buy out the 67.01% stake in MAHB that it does not own, at a price that MAHB had never hit prior to the offer. 

Should the deal succeed, the consortium called Gateway Development Alliance Sdn Bhd (GDA) will wholly own MAHB. Khazanah will be the single largest shareholder in the consortium with a 40% stake, while the Employees Provident Fund and GIP Aurea Pte Ltd (a joint venture between GIP and Abu Dhabi Investment Authority [ADIA]) will each hold a 30% stake.

GIP will have a 25% effective stake in MAHB via its 83.3% stake in the JV with ADIA, while ADIA will have a 5% effective stake.

The takeover of MAHB is aimed at upgrading and modernising the company’s operations, enhancing passenger service, improving airline connectivity and stimulating traffic growth, the joint offerors said of the rationale for their offer.

However, the opposition politicians criticised it for giving no clear details on the reason for selling the stake to GIP, arguing that if MAHB needed expertise in technical matters to improve operations, the company could rely on local expertise or appoint consultants at a high pay instead of undertaking a stake sale.

There will be endless debate if one chooses to believe that a stakeholder who has invested in the company would not be able to create better value compared with a highly paid consultant with no skin in the game. A possible supporting argument is that MAHB can keep paying a premium for consultants until the airport operator gets it right.

While it is not known how often MAHB has hired consultants in the past, one thing is for sure: The company has been a revolving door for directors, CEOs and managing directors.

Since 2014, it has had five managing directors or group CEOs, the latest being Datuk Mohd Izani Ghani, who took office in August replacing Datuk Iskandar Mizal Mahmood — who left after the breakdown of the aerotrain at Kuala Lumpur International Airport. (This number does not include Mohamed Rastam Shahrom, who was acting group CEO from October 2023 to August 2024.)

The longest-serving managing director since 2014 was Datuk Mohd Badlisham Ghazali, who was appointed in June 2014 for a four-year stint.

MAHB also had five non-executive chairmen and more than 20 directors had joined and resigned over the decade.

To be fair, the high turnover of management and board members could be linked to the changes in the political scene in recent years.

Its current independent directors have voiced their opposition against the privatisation exercise, saying the offer price does not reflect MAHB’s full potential, and that with the airport operator’s financials improving, They say MAHB will benefit from the great potential.  Notably, it had always been in an advantageous position in the past, still its performance has not been impressive.

Being the dominant player in the country, MAHB’s passenger volume is to a large extent guaranteed, as all residents in the country have to use the airports it operates for air travel. Simply put, there is no reason for MAHB’s financials not to improve given the global recovery in air travel.

From a broader perspective, MAHB has lost its Asean aviation market share, from 20% in 2013 to just 16% in 2023, according to GDA, which cautions that MAHB could be at risk of losing more market share as Singapore and Thailand have invested heavily in new capacity.

This means that MAHB has not been able to attract international airlines to use its facilities as a stopover hub, let alone have an extensive network of connectivity.

GDA notes that MAHB has been underinvested compared with its regional peers. Its facilities are ageing and operational failures have happened as a result. The suspended aerotrain, which MAHB has been trying to replace since 2017, is an example.

If MAHB management deserve a second chance, as some argue, don’t Malaysians too deserve better-run airports having given MAHB many years to prove itself? 

GIP as an infrastructure investor will need to unlock its investment values some years down the road. If the consortium is given a free hand, without any political interference, to do the right and necessary things to propel MAHB to be the leading player in the region, the investing public will still have a second chance to ride the growth potential when GIP looks to exit. 

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's App Store and Android's Google Play.