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Saturday, 1 November 2014

Early business dealings

Prospective buyers looking at a model of a township development in Iskandar Malaysia, Johor. Jho Low helped draw Mubadala Development Co from Abu Dhabi to Malaysia to make its first overseas real estate ventur e in Iskandar in 2007. However, the global crisis had thrown the Arab property world into disarray and that slowed down the development of the Medini parcel.

Prospective buyers looking at a model of a township development in Iskandar Malaysia, Johor. Jho Low helped draw Mubadala Development Co from Abu Dhabi to Malaysia to make its first overseas real estate ventur e in Iskandar in 2007. However, the global crisis had thrown the Arab property world into disarray and that slowed down the development of the Medini parcel.

LOW Teik Jho (pic), or better known as Jho Low became a noticeable figure in the Malaysian corporate scene when investments from Abu Dhabi in the United Arab Emirates started to make their way to the local shores.

The most notable was the facilitation of the entry of Abu Dhabi Commercial Bank (ADCB) into RHB Capital Bhd in 2008, at a price-to-book value of 2.2 times at RM7.20 per share. This was considered to be on the high side of banking valuations.


The other was the entry of Abu Dhabi-based funds staking their interest in the southern economic corridor, Iskandar Malaysia. In 2007, Jho Low helped draw Mubadala Development Co, a diversified investment company based in Abu Dhabi, to Malaysia to make its first overseas real estate venture in Iskandar Malaysia, Johor.

Mubadala was then the leading consortium investing US$720mil (RM2.1bil) in Medini Iskandar Malaysia to jointly develop a 2,230-acre parcel of land. But the global crisis had thrown the Arab property world into disarray and that slowed down the development of the Medini parcel.

These investments did not turn out well in subsequent years. RHB Cap shares never reached the valuations ADCB had paid, while the going was slow in Iskandar Malaysia.

In many of the business dealings where Middle-East funds are concerned in Malaysia, Jho Low is seen as the point person.

Between 2003 and 2010, Jho Low was said to have already made more than RM120mil from the various deals he had helped seal.

UBG

The deal with RHB Cap made the Abu Dhabi outfit and Jho Low close to the family of Tun Abdul Taib Mahmud, the former chief minister of Sarawak who is now the Governor of the state.

The Taib family, via Cahya Mata Sarawak Bhd, previously had a substantial interest in RHB Cap via its former investment arm UBG Bhd.

Jho Low had served as a non-executive director of UBG from September 2008 to November 2010.

In 2010, PetroSaudi International Ltd privatised UBG.

Prior to its privatisation, UBG had acquired construction outfit Putrajaya Perdana Bhd (PPB) and water infrastructure company Loh & Loh Corp Bhd with cash from its own pocket as part of an initiative to turn itself into a construction company.

UBG was then already a cash-rich company after having sold its entire 32.13% stake in the RHB banking group to the Employees Provident Fund for RM2.25bil in 2007. UBG bought a 49.21% stake in PPB from Swan Symphony Sdn Bhd for RM4.85 a share and a 37.56% stake in Loh & Loh from Binary Bestari Sdn Bhd at the same price.

Swan Symphony and Binary Bestari are related companies, with Abu Dhabi-Kuwait-Malaysia Investment Corp (ADKM) and Singapore and Australia-listed Autron Corp Ltd as their major shareholders.

Shareholders in ADKM include Abu Dhabi Investment Authority, Kuwait Investment Authority and members of the Terengganu royal family. Autron had a joint venture with The Wynton Private Equity Group a company founded by Jho Low to seek ventures in the region.

With PPB and Loh & Loh in the UBG stable, the idea was for them to pursue opportunities in Iskandar Malaysia for construction jobs undertaken by Middle-East investors. This plan, however, did not materialise, and the Taib family subsequently sold off its entire stake in UBG to PetroSaudi.

Meanwhile, one of the beneficiaries of UBG’s takeover of PPB and Loh & Loh was Autron, which made an estimated net gain of RM20mil from the sale.

The Oval Residences

Jho Low in a recent interview with The Wall Street Journal said his first big transaction came in 2006 when he assisted Kuwait Finance House to purchase the entire Oval Residences project of two high-rise apartment buildings in the prime location of KLCC Park in Kuala Lumpur for US$87mil.

By 2008, the project successfully sold and closed in its entirety, generating a project profit of close to US$20mil.

According to Autron’s filings, it had acquired Oval Residences in the second half of 2008.

Role in setting up TIA

However, his rise to fame came when he was made special adviser to the Sultan of Terengganu and the-then Yang di-Pertuan Agong Sultan Mizan Zainal Abidin, who was also at that point of time the chairman of the now-defunct Terengganu Investment Authority (TIA). The aim of TIA was to manage the state’s annual oil royalty from Petroliam Nasional Bhd (Petronas).

Jho Low was involved in the setting up of TIA from January 2009 to mid-May 2009, given his market-based knowledge and relationship with the Middle East and blue-chip international sovereign wealth fund.

The original plan was for the Federal Government to guarantee the issuance of an RM5bil debt paper and another RM6bil to be securitised from the annual royalty payment from Petronas.

TIA never took off. But the Federal Government established 1Malaysia Development Bhd (1MDB) to function as a sovereign wealth fund for the country.

By May 2009, the plan got off the ground with the issuance of the 30-year RM5bil debt paper at a coupon rate of 5.75%.

1MDB started to makes waves, while Jho Low faded from the scene until a year later when he went on to set up Jynwel Capital in Hong Kong.


Related stories:

Jho Low back in the limelight

Firm evaluates ‘unique’ investments globally

Low family fortune first built on iron-ore mining


Tags / Keywords: Low Taek Jho , Jynwel Capital , 1MDB

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