Tuesday, 20 September 2011

Bandar Raya: another RPT



It is a busy time for corporate Malaysia, one after the other Related Party Transaction (RPT) or General Offer (GO) with delisting threat. And why not, minority investors have hardly any chance to fight them. The authorities (Securities Commission and Bursa Malaysia) are only looking for form, not substance and are definetely not making any plans to improve the fighting chances for the minority investors. Who cares about them anyhow?

From the Business Times:
http://www.btimes.com.my/Current_News/BTIMES/articles/BDIVI/Article/index_html

"Bandar Raya Developments Bhd (BRDB)'s board of directors have accepted an offer from Ambang Sehati Sdn Bhd to acquire some of its assets and liabilities in a deal valued at RM914 million.

Upon completion of the deal, BRDB is also proposing to pay RM390.12 million or 80 sen a share as cash dividend to shareholders, upon receiving the cash from Ambang Sehati.

Early this month, the BRDB board hired CIMB Investment Bank to evaluate the deal.

Ambang Sehati is 26 per cent-controlled by BRDB's chairman Datuk Mohamed Moiz Jabir Mohamed Ali Moiz. Moiz also has an 18.8 per cent stake in BRDB.

"This was an unsolicited offer. We did receive offers from other parties before but there was nothing serious on the table. After weighing the offer from Ambang Sehati against what is happening in the market, we found it a very interesting deal," said BRDB's chief executive officer Datuk Jagan Sabapathy.

Speaking to newsmen after the close of the stock market yesterday, Jagan said the board's decision took into account the advice and opinion of its main adviser CIMB and independent adviser Public Investment Bank Bhd."

I am not aware that Public Investment Bank Bhd has actually made a recommendation, but may be it is in the making and it will be published soon. What should happen in this case is that other interested (foreign) parties will have a chance to bid for the properties. That would be a no-lose situation for the minority investors, on one side they are sure to get the best value for their money, on the other side they already have the offer from the majority investor.

Will the independent directors or the authorities force Bandar Raya to open up the offer for outside parties. I don't think so.

And lastly, as Ze Moola rightly asked in his blog: why all the hurry?

More about this deal:
http://whereiszemoola.blogspot.com/2011/09/and-ambang-sehati-is-rewarded-with-736.html
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4 comments:

  1. Anonymous25 September 2011 at 10:40

    Commentary on BRDB by Minority Shareholder Watchdog Group

    http://www.mswg.org.my/web/files/editor_files/file/MSWG-Commentary-on-BRDB---Proposed-Disposal-of-Properties-%28FINAL-22-Sept-2011%29.pdf

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  2. M.A. Wind25 September 2011 at 11:10

    Thanks for the link. I agree with most, especially the nominee's must be known. If not, they should be excluded from voting. Unfortunately, I don't have much hope for a second asset valuation, in this kind of deals they are always on the high side in Malaysia, if the valuer would be on the low side he would not get other future jobs. I really like an auction for the assets, or at least an opportunity for computing external bids. These are priced assets that should give a good yield and should do good in an inflationary environment, excellent for long term investment holdings, like for pension funds.

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  3. Ooi Beng Hooi25 September 2011 at 11:53

    Some listed REITS may be interested in the properties and may be able to offer higher price...

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  4. M.A. Wind25 September 2011 at 12:00

    Agree, REITS, pension funds, foreign funds looking for Asian exposure. Anyhow strange to sell now, why not first wait for the new rental agreements? This deal is surrounded by a hurry that I don't like.

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