Tricky proposition for Khazanah in CIMB

AFTER Khazanah Nasional Bhd’s partial divestment in IHH Healthcare Bhd , there are at least six locally-listed companies which could see a reduction in shareholding by the sovereign wealth fund (SWF).

The fund owns substantial stakes in some of Malaysia’s largest companies, including banking group CIMB Group Holdings Bhd , Axiata Group Bhd , UEM Sunrise Bhd and UEM Edgenta Bhd .

These companies were previously core holdings but have now been placed under the fund’s “commercial” pool of assets.

Put in a nutshell, the commercial pool of assets are up for divestment for the right price.

This is evident from Khazanah managing director Datuk Shahril Ridza Ridzuan’s recent media interview where he envisaged 70% of the fund’s assets being placed in the commercial basket.

He has indicated that it would no longer look to hold onto its large stakes in these companies, feeling more comfortable in whittling them down when opportunities arise.

The remaining 30% of its assets would be companies that have “strategic” roles such as Telekom Malaysia Bhd , Tenaga Nasional Bhd , Malaysia Airports Holdings Bhd and Malaysia Airlines Bhd.

In November last year, Khazanah sold a 16% stake in IHH to Japan’s Mitsui & Co Ltd for RM6 per share in a deal valued at RM8.42bil. That transaction effectively kicked off Khazanah’s divestment strategy because IHH was previously considered a core holding for the SWF.

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Investment , Malaysia banking merger , CIMB , RHB , Khazanah , EPF