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

What is the common denominator between Transport Minister Anthony Loke Siew Fook, IJM Corp Bhd boss Datuk Lee Chun Fai and Pestech International Bhd group CEO Paul Lim Pay Chuan? They have signed up for a ride to fix the 25-year-old aerotrain service at Kuala Lumpur International Airport, which is expected to finally reach its destination after years of delay.

Managing director and group CEO of Pestech International Bhd

Paul Lim Pay Chuan has yet again come under the spotlight this year after discussions with construction giant IJM Corp Bhd to sell a 44.8% stake in Pestech (KL:PESTECH) fell through.

The cash-strapped electrical engineering company was set to get a new lease of life, thanks to a RM124 million cash injection from IJM via the transaction.

Part of the proceeds would have gone to fund its working capital requirements for its projects, including the upgrade of the Kuala Lumpur International Airport’s aerotrain system. However, the stake acquisition deal fell through after a breakdown in negotiations — but not before Pestech won back the RM742.95 million aerotrain contract it had lost from Malaysia Airports Holdings Bhd (MAHB) in 2023 due to prolonged delays in its delivery.

At a press conference in January, Transport Minister Anthony Loke Siew Fook dismissed talk of government interference when asked why Pestech was back in the picture. MAHB further clarified that Alstom Transport Systems (M) Sdn Bhd, the aerotrain’s original equipment manufacturer, had chosen to work with IJM and Pestech for the remainder of the project.

And just when Pestech’s future was hanging in the balance, Lim managed to bring a new white knight in — private rail construction company Dhaya Maju Infrastructure (Asia) Sdn Bhd (DMIA), which is led by businessman Datuk Seri Dr S Subramaniam Pillai. This time around, the stake sale was bigger at RM160 million or 12 sen per share — a 7.69% discount to Pestech’s last traded price before the announcement — for approximately 57.52% of Pestech through a restricted share issue.

In December, Subramaniam emerged as a controlling shareholder in Pestech with an indirect stake of 57.524% through DMIA. He was also appointed as group executive director. Post transaction, Lim still holds a direct stake of 4.972% in Pestech and an indirect stake of 0.057% via Vestech Projects Sdn Bhd.

Group CEO and managing director of IJM Corp Bhd

Datuk Lee Chun Fai made news in 2023 for orchestrating a deal with smaller rival Pestech International Bhd to secure a 44.8% stake in Pestech for RM124 million or 15.5 sen per share — a steep 47% discount to Pestech’s last traded price before the announcement. The transaction would have made IJM Corp Bhd (KL:IJM) its largest shareholder.

Analysts saw the proposed deal as a win-win for both companies when bidding for larger power infrastructure and rail projects regionally, given IJM’s expertise in civil construction and Pestech’s focus on rail electrification and systems.

At the same time, IJM’s planned entry would strengthen Pestech’s case in Malaysia Airports Holdings Bhd’s (MAHB) termination of a RM742.95 million aerotrain contract at Kuala Lumpur International Airport (KLIA) due to prolonged delays in its delivery. Indeed, in January this year, a consortium comprising Alstom Transport Systems (M) Sdn Bhd and a joint venture (JV) between IJM and Pestech was appointed by MAHB to complete the aerotrain project.

However, Lee once again took the spotlight this year after IJM called off the acquisition in August. The non-fulfilment of conditions precedent in the agreement was cited as a reason.

Quoting sources, The Edge reported in August that the deal was aborted after IJM failed to convince the lenders of cash-strapped Pestech to take a haircut in the latter’s loans to make its operations sustainable.

This, however, did not affect the existing JV between IJM and Pestech for the remaining work of the KLIA aerotrain project amounting to RM176 million, with IJM holding a 60% stake and Pestech the remaining 40% in the JV. At the time of writing, project completion remains on track for the first quarter of 2025.

Still, 2024 marks a year of hits and misses for IJM. In a major coup, the group’s property arm IJM Land Bhd had in May secured the opportunity to develop eight strategic sites across four London boroughs — Brent, Camden, Islington and Westminster — through its UK subsidiary RMS (England) 2 Ltd, in a partnership with the property arm of Britain’s railway operator Network Rail Ltd. A total of 1,600 new homes, with an estimated gross development value exceeding £3 billion (RM17.8 billion), will be built on these sites.

In November, IJM also proposed to acquire a 50% stake in UK-based contractor JRL Group Holdings Ltd for £50 million, which will enable the group to expand further into the UK market and strengthen its core construction capabilities.

However, in the same month, a tripartite consortium led by IJM lost an RM818 million bid to develop the Batu Kawan Industrial Park 2 in Penang through an open tender. State-owned Penang Development Corp (PDC) had rejected the offer without providing a reason and called for a new tender.

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