KUALA LUMPUR: Khazanah Nasional Bhd made a healthy profit from the sale of its 40% stake in Malaysian Shoaiba Consortium Sdn Bhd to Malakoff Corporation Bhd
as it had achieved the commercial objectives of its investment.
The sovereign wealth fund said on Monday that Malakoff's purchase of the stake allowed it to exit with a healthy profit at a value based on future cash flows of the project.
It issued a statement to clarify recent news reports which stated it disposed of the stake for US$70mil.
Khazanah said 2005, it had entered into a joint investment with Malakoff and Tenaga Nasional Bhd (TNB), to support Malaysia’s entry into Saudi Arabia’s independent water and power producer market.
“As the project is completed and fully operational, Khazanah has achieved the commercial objectives of its investment in the consortium. In accordance with the consortium’s shareholders agreement, our 40% stake was offered to the existing partners,” it said.
News reports stated Malakoff's unit Malakoff Gulf Ltd had entered into a share sale agreement with Khazanah over the acquisition of the entire stake in Desaru Investments (Cayman Isl.) Ltd, which in turn owns 40% in Shoaiba Consortium. Malakoff Gulf held the other 40% while TNB held the remaining 20%.
Malakoff chief executive officer Datuk Ahmad Fuaad Kenali was reported saying the acquisition would provide immediate earnings accretion to the company as well as increase in cashflows, derived from the remaining 10 years contract under Shuaibah Water & Electricity Co Ltd’s power and water purchase agreement for Shuaibah 3 Independent Water and Power Plant.
Fuaad was quoted saying this included Shuaibah Expansion Project Company’s water purchase agreement for Shuaibah 3 Expansion Independent Water Plant.
Meanwhile Khazanah said it assesses all opportunities for divestment against set financial and strategic targets.
“Assets may be considered for divestment once the intended investment objectives and targeted returns have been achieved, as is the case with the divestment of our stake in the consortium.
“Divestments may also depend on the strength of the market, as well as the availability, quality and credibility of buyers,” it said.
Khazanah said under its refreshed mandate, it operates on a two-fund model – a commercial fund and a strategic fund.
In general, its commercial fund is focused on creating a global portfolio that diversifies its assets and income for the country’s benefit.
As for its strategic fund, it focuses on strategic domestic investments, particularly in infrastructure.
Khazanah said the proceeds from the divestments would be reinvested based on the objectives of the two funds or are used to repay existing debts on its balance sheet.
“For the year to date, Khazanah has committed investments amounting to approximately RM1.4bil and reduced overall debt by approximately RM6.4bil, in line with our corporate strategies. We further expect to undertake more investments in the second half of 2019, based on the opportunities that we are exploring,” it said.
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