After O&G what’s next for Mokhzani?

  • Business
  • Saturday, 22 Oct 2016

Internet savvy: Mokhzani is ?Malaysia

NOW that savvy investor Tan Sri Mokhzani Mahathir has parted ways with long time business partner Datuk Yeow Kheng Chew, better known as KC, what lies in part two of Mokhzani’s dynamic investing journey?

Over the week, the end of their partnership was made official.

The two principal owners of Kencana Capital Sdn Bhd – Mokhzani and Yeow – are splitting their business interests in the investment holding company as part of a large-scale restructuring exercise.

This reshuffle involves the buyout of Yeow’s stake in Kencana Capital.

In turn, Yeow is acquiring Kencana’s stake in Yinson Holdings Bhd. The swap essentially means that Mokhzani will become the sole owner of Kencana following the restructuring.

Yeow is acquiring the 119.71 million Yinson shares at RM3.07, as well as 33 million more shares in Yinson, which were distributed to him by Kencana Capital by way of a dividend in specie. This gives Yeow a collective stake of 14% stake in Yinson, a company that operates floating production, storage and offloading (FPSO) vessels catering to the oil and gas (O&G) industry.

Yinson has been one of Kencana Capital’s better investments. Recall that Yinson’s shares rallied like no other back in 2013, rising almost 200% on a year to date basis, when Kencana Capital first emerged with a 4.54% stake, and subsequently when it took another placement amounting to a 14.64% stake in the company.

To date, Yinson is indeed one of the better O&G stocks on Bursa Malaysia, having outperformed the broader market this year, and making it one of the few O&G counters with a positive return. To date, its shares have gained 8.87%.

Inclination to IoT

From the past investments he has made, it is quite obvious that Mokhzani prefers investing in the bricks and mortar business. Over the last three decades, he’s had his core investments in oil and gas, property and education.

Now, for phase two of Mokhzani’s investing jaunt, it would appear that he is especially keen on the businesses of the new economy – businesses more aligned with clicks and mouses such as the Ubers, AirBnBs, WhatsApps and Tencents.

Sources say that Mokhzani believes that the next big thing lies not in oil, but in the Internet.

And he is having a strong inclination to that concept called the “Internet of Things” or IoT. While obviously still in the catch up and learning phase, Mokhzani believes “communications”, not telecommunications, could be the next big thing moving forward.

Close associates say that in a conversation Mokhzani had with shipping tycoon Fred Olsen of Fred Olsen & Co, he was struck by what the shipping magnate said – which was that the next phase of consumption was not going to be for oil, but for the Internet. This was a massive epiphany, particularly coming from a baron who made his money in the capital intensive and commodity reliant business of shipping.

Thus in a way, it isn’t all surprising that Mokhzani and Yeow have decided to split their business interests,

Having been business partners over the last three decades, interests have evolved and priorities are also changing.

Yeow 64, has also always been the numbers person of the duo, with his forte being in investing and researching on companies. He is able to attach a numerical value on any company.

With Yeow having two grown-up children, he could be thinking about succession planning and divvying up his businesses to them.

Perhaps his appetite of growing businesses, which typically take up a lot of energy and effort, may be wanning.

Mokhzani 55, on the other other hand is still very much passionate and optimistic about growing new businesses and investing in start ups. Mokhzani’s five children are also a lot younger, so his vigour and interest for new ideas are very much alive.

He may be looking for other businesses outside of oil and gas, which his children could be interested in.

Whatever it may be, the market will be eagerly anticipating which company Mokhzani lends his name too. Dealmakers will likely be lining up to peddle their ideas.

Whats for sure though, is that if Mokhzani were to invest in a listed company, sentiment will absolutely bubble ahead of fact and fundamentals.

Dynamic duo

The partnership between Mokhzani and Yeow has started since their early days in Tongkah Holdings Bhd back in 1987. Yeow has been a loyal right hand to Mokhzani throughout the many trials and tribulations of business and life.

In all their ventures together, whether in Tongkah, Pantai Holdings Bhd or Kencana Capital, Yeow has held key positions. Yeow was also a director in Kencana Capital.

For close to three decades, the dynamic duo of Mokhzani and Yeow via Kencana Capital, made investments in the various sectors of oil and gas, properties, education and information technology.

They have complemented one another immensely to build up a large investment portfolio from a small capital base..

To give this some perspective, when Mohzani and Yeow started Kencana Capital in 2001, they had put in capital of RM30mil.

Today some 15 years later, Kencana is valued at some RM1.5bil. Its safe to say that its been a successful and fruitful journey that few can dream off.

Mokhzani and Yeow’s first major venture into the O&G sector was through Kencana Petroleum Bhd back in 2001, and boy, was that a success.

They put in a substantial amount of money in the Lumut Fabrication Yard, which was Kencana’s major fabrication yard located at Lumut Industrial Park, Perak.

By early 2005, the Lumut Fabrication Yard has expanded from the initial size of approximately 11 acres to total yard area of approximately 53 acres with 185,000 and 27,000 square metres of open and covered fabrication space respectively. It is believed to be more than 300 acres now.

Kencana’s listing in 2006 was celebrated with much fanfare. Back then, the oil and gas sector was very much in vogue, following the rise of high profiled and politically linked companies such as SCOMI GROUP BHD.

Against a backdrop of jobs chasing contractors and add that a new company was to be listed led by the son of Malaysia’s former Prime Minister Tun Dr Mahathir Mohamad. Kencana’s share price was almost on a perpetual upward trajectory.

Five-fold increase

Shareholders who had held on to Kencana shares until it was merged with SapuraCrest Petroleum Bhd in 2011, would have been enriched by some five-fold.

In 2011, the company struck a notable merger with SapuraCrest Petroleum Bhd in a massive RM12bil deal, which was one of the largest in the history of corporate Malaysia.

This resulted in the creation of integrated offshore services firm SapuraKencana Petroleum Bhd (SapKen), which was successfully listed on Bursa Malaysia in May 2012.

Notably, In February 2014, four months before the collapse of crude oil prices, Mokhzani (who held his SapKen block through a vehicle called Khasera Baru Sdn Bhd) sold 190.3 million shares in SapKen at a price of RM4.30 apiece. This gave them proceeds of RM820mil.

SapKen shares have lost more than half that value since then. Mokhzani and Yeow left the board of SapKen last year, although Khasera Baru still holds a balance 10% stake in SapKen.

Over the last few years, Kencana Capital was a cornerstone investor in IHH HEALTHCARE BHD and Astro Malaysia Holdings Bhd. It also had long term investments in property which included investments with Capital Land, UOA and in Menara SapuraKencana.

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Business , Mokhzani , KC , Yeow , Kencana


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