From the website of The Star:
Independent adviser recommends acceptance of Bandar Raya Developments buyout
The independent adviser for Bandar Raya Developments Bhd (BRDB) has recommended that minority shareholders accept the RM2.90 per share general offer by the company's major shareholder, deeming the offer as “not fair but reasonable”.
Major shareholder and chairman, Datuk Mohamed Moiz Jabir Mohamed Ali Moiz, who owns 18.47% of BRDB via his private vehicle Ambang Sehati Sdn Bhd, had earlier made an offer to acquire all the shares and warrants of BRDB at RM2.90 and RM1.80 respectively. Moiz has been BRDB chairman since February 2002
The independent adviser, namely AmInvestment Bank Bhd, said in a circular to shareholders that the offer price for the shares represented a 91 sen or 23.88% discount to the estimated revised net asset value of the shares. “In our view, this 23.88% discount renders the share offer price of RM2.90 to be not fair,” it said.
However, it has recommended that shareholders accept the offer as the offer is considered not detrimental to them since the shares and warrants have consistently been trading below the offer price for the past three years up to July 30, when the offer was made.
Furthermore, AmInvestment Bank said BRDB had not received any other offer for the company's shares or its assets and liabilities.
It said the share offer price represented a premium ranging from 39 sen to 53 sen per share over the five-day, one-month, three-month and six-month volume weighted average market price up to July 30 while the warrant offer price represented a 36 sen to 52 sen premium over the same periods.
It added that the share offer price's 39-sen premium based on the five-day volume weighted average market price “is within the range of successful precedent privatisation transactions in Malaysia of 2.46% to 37.50% since January 2011.”
AmInvestment Bank also reminded holders of the warrants that these securities would expire on Sept 26, after which they would have no value.
It said that based on the share offer price, the annual gross dividend yield for the shares for the past two years was about 2.59%.
Ambang Sehati had proposed the acquisition of The Bangsar Shopping Centre, Menara BRDB, CapSquare Retail Centre and Permas Jusco Mall early last September on a fair value basis. The properties had a total value of RM942.37mil.
But the offer to buy the properties at RM914mil fell through several weeks later after questions arose over the price, motives behind the acquisition, the identity of the ultimate shareholders behind a 23.57% block of shares held under a nominee account for Credit Suisse and the company's prospects after losing properties generating recurring income.
It was then decided that the properties would be sold via open tender by the first quarter of this year with Ambang Sehati participating but the tender for the properties was never carried out. This was followed by the general offer by Ambang Sehati to buy out the rest of the shares in BRDB for RM1.17bil cash.
BRDB closed unchanged at RM2.85.
Is the identity of the large block of shares already revealed? If not, why not, should there not be transparency regarding this important matter?
Interestingly, the major shareholder of BRDB was also the same party behind the settlement of the CLOB shares. And sentiment towards the way the CLOB issue was handled is pretty negative (to put it mildly) in Singapore, and might have to do with the luke warm start of the SGX-Bursa trading link. Below is a part of an article is from the Business Times (Singapore):
SGX-Bursa trading link off to a slow start
The trading link between the Singapore Exchange (SGX) and Bursa Malaysia (BM) went "live" yesterday but failed to excite investors - dealers here reported little or no interest among the clients who were said to be more concerned with Europe's debt worries and the US stagnant economy.
"Singapore investors could already trade Malaysian shares for years before this link and vice-versa while clients could also trade through the Internet," said a dealer. "Maybe when the other Asean exchanges come online, interest will pick up."
And from the Straits Times:
"As expected, the first day of the SGX-Bursa link did not have any visible impact on trading activity".
Showing posts with label CLOB. Show all posts
Showing posts with label CLOB. Show all posts
Wednesday, 19 September 2012
Monday, 17 September 2012
Blast from the Past: CLOB (2)
From The Straits Times, an article by Anita Gabriel:
Tycoon who made Clob investors a daring offer
Before 1999, few had heard of reclusive tycoon Akbar Khan, a Singaporean businessman based in Kuala Lumpur.
But not many could forget him once he emerged on the scene back then with a plan to free up frozen Clob shares.
Mr Khan and his nephew, Mr Mohamed Moiz Ali Moiz - another name etched in the memory of former Clob investors - have been making some big corporate moves in recent months.
Mr Khan's private vehicle Ambang Sehati - also owned by his two children and Mr Moiz - recently launched a RM 1.5 billion takeover offer for Bandaraya Development (BRDB), a listed flagship property firm in Malaysia where they are the majority shareholder.
BRDB is mostly involved in the high-end luxury residential market. Ambang Sehati acquired BRDB in 2001 following a restructuring of Multi-Purpose Holdings, which was a Clob darling that was popular with Singapore investors in the 1990's.
Mr Khan, a chartered accountant by training who is widely perceived to be close to Malaysia's former finance minister Daim Zainuddin, continues to keep a low profile.
In 1999, his Effective Capital - where Mr Moiz was chief executive - enraged Singaporeans when it first swooped in with a cash offer to buy all the Clob shares at half their last traded price.
(Note MAW: the last traded price was already very depressed, this all happened in the midst of the Asian crisis)
Matched by somewhat palatable offers made by other parties, he would tweak his offer several times later.
His final plan to migrate the shares back to their rightful shareholders on a staggered basis at a fee of 1.5 per cent eventually pulled through, reportedly netting the company Effective Capital a cool RM 80 million.
The fee was hard to swallow for the stricken investors who had suffered great losses.
Tycoon who made Clob investors a daring offer
Before 1999, few had heard of reclusive tycoon Akbar Khan, a Singaporean businessman based in Kuala Lumpur.
But not many could forget him once he emerged on the scene back then with a plan to free up frozen Clob shares.
Mr Khan and his nephew, Mr Mohamed Moiz Ali Moiz - another name etched in the memory of former Clob investors - have been making some big corporate moves in recent months.
Mr Khan's private vehicle Ambang Sehati - also owned by his two children and Mr Moiz - recently launched a RM 1.5 billion takeover offer for Bandaraya Development (BRDB), a listed flagship property firm in Malaysia where they are the majority shareholder.
BRDB is mostly involved in the high-end luxury residential market. Ambang Sehati acquired BRDB in 2001 following a restructuring of Multi-Purpose Holdings, which was a Clob darling that was popular with Singapore investors in the 1990's.
Mr Khan, a chartered accountant by training who is widely perceived to be close to Malaysia's former finance minister Daim Zainuddin, continues to keep a low profile.
In 1999, his Effective Capital - where Mr Moiz was chief executive - enraged Singaporeans when it first swooped in with a cash offer to buy all the Clob shares at half their last traded price.
(Note MAW: the last traded price was already very depressed, this all happened in the midst of the Asian crisis)
Matched by somewhat palatable offers made by other parties, he would tweak his offer several times later.
His final plan to migrate the shares back to their rightful shareholders on a staggered basis at a fee of 1.5 per cent eventually pulled through, reportedly netting the company Effective Capital a cool RM 80 million.
The fee was hard to swallow for the stricken investors who had suffered great losses.
Saturday, 15 September 2012
Blast from the Past: CLOB
Again an excellent posting from "DanielXX" at this web address.
Having read the various postings in Shareinvestor.com for some time, it is surprising that an event which happened about eight years ago still evokes so much emotion among veteran investors in the stock market. Pan Electric and the Asian financial crisis nowadays seem like distant memories, yet the CLOB saga strikes a raw nerve among those who had their money in these stocks (including some of my relatives) when the Malaysia government froze CLOB accounts in 1998.
The move was a direct result of the Asian currency crisis, when foreign speculators shorted the currencies of highly leveraged Asian countries, with Southeast Asia being particularly hard hit. Dr Mahathir, then Malaysia's PM, came up with the idea of imposing capital controls (a move for which he was lauded later for its effectiveness) to curb speculation (if money could not be moved out, any gains foreigners made from speculating would essentially be frozen, hence the markets would stabilise).
Of course, this also meant the CLOB market facilitating buying of Malaysian shares on the Singapore market would be affected. CLOB, or Central Limit Order Book (don't ask me why it is so named... reminds me of Central Limit Theorem in statistics) was set up in Singapore to trade Malaysian companies over-the-counter in Singapore after the Malaysian and Singaporean exchanges separated in 1990. Over the years it had developed into the main avenue for veteran Singaporean investors to invest in Malaysian equities.
The amount of money in CLOB shares at the time of the suspension in trading in September 1998 gives a clue to the anguish that is still felt by many investors today. There were about 172,000 Clob investors on the books - as many as 95 percent of them Singaporeans - and the total shares had a value of approximately US$4.47 billion. That works out to about US$25,000 per CLOB investor (remember that the US$ was king then) .... an indication that these CLOB share buyers were not small fry. And yet they got killed by events beyond their control. Under the arrangements following the CLOB market suspension, all shares in CLOB accounts were to be eventually transferred to accounts in the Malaysian Central Depository for eventual trading on the Kuala Lumpur Stock Exchange (KLSE). However, the Malaysian government feared a massive share overhang in the KLSE (given the enormous amounts of money tied up) if liquidation was made possible en-bloc and hence things dragged on as the SES (the predecessor of SGX) and the KLSE worked to facilitate the share migration.
There would be no clear resolution to the issue until early 2000, and between 1998 and then there was an ugly war of words between the Malaysian and Singaporean market authorities which served only to exacerbate the unfortunate situation. Bank Negara's (Malaysia's central bank) chief claimed that during the Asian crisis, CLOB shares were being borrowed to be short-sold on the Malaysian market, hence hinting at the reason why the CLOB market was suspended. It was further suggested that the Singapore authorities had done nothing to deter such damaging actions to the Malaysian market. The war of words then shifted over to the legitimacy of the CLOB market, with KLSE noting that the CLOB market was created "unilaterally" by SES to facilitate to generate revenue for the SES, was "never endorsed by the Malaysian authorities", and was effectively an "an unauthorised market for Malaysian shares" and that there were inherent risks to those who invested in CLOB shares. SES, of course, had never made public to its investors of such a risk. On its part, the latter declared that "trading of Malaysian securities on Clob was not authorised by Malaysian authorities because it required no such authorisation", and that it was essentially a win-win game as Singaporean money provided liquidity and support to Malaysian stocks. Of course, it was win-win so long as things were going fine.... it took a major dislocation like a regional financial crisis to unleash the inner demons.
Finally in early 2000 the two exchanges worked out a scheme of arrangement for letting CLOB investors trade out of their misery, where investors were offered two options, both of which involved releasing of CLOB shares on a staggered basis over >10 months, reflecting the KLSE's abovementioned concerns of a share glut should all be released at one go. The faster scheme involved payment (something like 2% upfront) of higher administrative fees to a Malaysian company, Effective Capital, which was linked to Malaysia's then-Finance Minister Daim Zainuddin, an indication of how business operates in Malaysia. CLOB investors were strongly urged by the Malaysian side to opt for the Effective Capital scheme. Although there were calls for this to be referred to the WTO given the rather unfair scheme of arrangement and rather threatening tones adopted by the Malaysian authorities to CLOB investors to accept the proposed schemes, it appears that ultimately the CLOB investors had been worn down sufficiently by the two-year impasse to succumb and sell off at huge losses. For a US$4.5B CLOB position (believe it was measured at 2000 market prices based on KLSE), Effective Capital offered US$1.5B to "take over the risk" of holding the long position. One knows that given its government links, it would have no problem disposing of this entire line eventually in the KLSE.
Out of this whole saga arose SIAS, Small Investor's Association of Singapore, which represented the bulk of CLOB investors in liaising with the various authorities. It also gave rise to the easily understood term "CLOB-bered". Most of all, it gave rise to a fear of Malaysian stocks, not just by Singaporeans but by most foreign investors, who saw the perils of putting their money in a market that could easily change tack when under pressure. There are plans by the SGX to restore trading links with Bursa Malaysia soon. Perhaps that might go some way to restore investor interest in this market.
The last two sentences do ring a bell, the Malaysian and Singaporean stock markets are indeed trying to link up, something that has been delayed. But please note that the above was written in 2006, six full years ago.
From the above it might be clear that Malaysians should not expect Singaporeans to jump on the first opportunity to trade Malaysian shares through a direct link. Even now, 14 years later, things have not been forgotten. The amount of USD 4.47 Billion might not look that much, but my guess is that it was calculated using the very depressed share prices of that moment.
Although it might indeed have been better to close CLOB in the long term, the way it was handled and the timing (in the midst of the Asian crisis) was simply horrific. CLOB accountholders should have been informed about the pending closing of the CLOB market, and all should gradually have been phased out.
Some links: Asia Times, Time Asia and Singapore Window.
Having read the various postings in Shareinvestor.com for some time, it is surprising that an event which happened about eight years ago still evokes so much emotion among veteran investors in the stock market. Pan Electric and the Asian financial crisis nowadays seem like distant memories, yet the CLOB saga strikes a raw nerve among those who had their money in these stocks (including some of my relatives) when the Malaysia government froze CLOB accounts in 1998.
The move was a direct result of the Asian currency crisis, when foreign speculators shorted the currencies of highly leveraged Asian countries, with Southeast Asia being particularly hard hit. Dr Mahathir, then Malaysia's PM, came up with the idea of imposing capital controls (a move for which he was lauded later for its effectiveness) to curb speculation (if money could not be moved out, any gains foreigners made from speculating would essentially be frozen, hence the markets would stabilise).
Of course, this also meant the CLOB market facilitating buying of Malaysian shares on the Singapore market would be affected. CLOB, or Central Limit Order Book (don't ask me why it is so named... reminds me of Central Limit Theorem in statistics) was set up in Singapore to trade Malaysian companies over-the-counter in Singapore after the Malaysian and Singaporean exchanges separated in 1990. Over the years it had developed into the main avenue for veteran Singaporean investors to invest in Malaysian equities.
The amount of money in CLOB shares at the time of the suspension in trading in September 1998 gives a clue to the anguish that is still felt by many investors today. There were about 172,000 Clob investors on the books - as many as 95 percent of them Singaporeans - and the total shares had a value of approximately US$4.47 billion. That works out to about US$25,000 per CLOB investor (remember that the US$ was king then) .... an indication that these CLOB share buyers were not small fry. And yet they got killed by events beyond their control. Under the arrangements following the CLOB market suspension, all shares in CLOB accounts were to be eventually transferred to accounts in the Malaysian Central Depository for eventual trading on the Kuala Lumpur Stock Exchange (KLSE). However, the Malaysian government feared a massive share overhang in the KLSE (given the enormous amounts of money tied up) if liquidation was made possible en-bloc and hence things dragged on as the SES (the predecessor of SGX) and the KLSE worked to facilitate the share migration.
There would be no clear resolution to the issue until early 2000, and between 1998 and then there was an ugly war of words between the Malaysian and Singaporean market authorities which served only to exacerbate the unfortunate situation. Bank Negara's (Malaysia's central bank) chief claimed that during the Asian crisis, CLOB shares were being borrowed to be short-sold on the Malaysian market, hence hinting at the reason why the CLOB market was suspended. It was further suggested that the Singapore authorities had done nothing to deter such damaging actions to the Malaysian market. The war of words then shifted over to the legitimacy of the CLOB market, with KLSE noting that the CLOB market was created "unilaterally" by SES to facilitate to generate revenue for the SES, was "never endorsed by the Malaysian authorities", and was effectively an "an unauthorised market for Malaysian shares" and that there were inherent risks to those who invested in CLOB shares. SES, of course, had never made public to its investors of such a risk. On its part, the latter declared that "trading of Malaysian securities on Clob was not authorised by Malaysian authorities because it required no such authorisation", and that it was essentially a win-win game as Singaporean money provided liquidity and support to Malaysian stocks. Of course, it was win-win so long as things were going fine.... it took a major dislocation like a regional financial crisis to unleash the inner demons.
Finally in early 2000 the two exchanges worked out a scheme of arrangement for letting CLOB investors trade out of their misery, where investors were offered two options, both of which involved releasing of CLOB shares on a staggered basis over >10 months, reflecting the KLSE's abovementioned concerns of a share glut should all be released at one go. The faster scheme involved payment (something like 2% upfront) of higher administrative fees to a Malaysian company, Effective Capital, which was linked to Malaysia's then-Finance Minister Daim Zainuddin, an indication of how business operates in Malaysia. CLOB investors were strongly urged by the Malaysian side to opt for the Effective Capital scheme. Although there were calls for this to be referred to the WTO given the rather unfair scheme of arrangement and rather threatening tones adopted by the Malaysian authorities to CLOB investors to accept the proposed schemes, it appears that ultimately the CLOB investors had been worn down sufficiently by the two-year impasse to succumb and sell off at huge losses. For a US$4.5B CLOB position (believe it was measured at 2000 market prices based on KLSE), Effective Capital offered US$1.5B to "take over the risk" of holding the long position. One knows that given its government links, it would have no problem disposing of this entire line eventually in the KLSE.
Out of this whole saga arose SIAS, Small Investor's Association of Singapore, which represented the bulk of CLOB investors in liaising with the various authorities. It also gave rise to the easily understood term "CLOB-bered". Most of all, it gave rise to a fear of Malaysian stocks, not just by Singaporeans but by most foreign investors, who saw the perils of putting their money in a market that could easily change tack when under pressure. There are plans by the SGX to restore trading links with Bursa Malaysia soon. Perhaps that might go some way to restore investor interest in this market.
From the above it might be clear that Malaysians should not expect Singaporeans to jump on the first opportunity to trade Malaysian shares through a direct link. Even now, 14 years later, things have not been forgotten. The amount of USD 4.47 Billion might not look that much, but my guess is that it was calculated using the very depressed share prices of that moment.
Although it might indeed have been better to close CLOB in the long term, the way it was handled and the timing (in the midst of the Asian crisis) was simply horrific. CLOB accountholders should have been informed about the pending closing of the CLOB market, and all should gradually have been phased out.
Some links: Asia Times, Time Asia and Singapore Window.
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