MAA Group to scout for new business

Yaacob: Nothing’s changed. We’re still trying to comply with Bursa Malaysia’s requirement to look for a new business.

KUALA LUMPUR: MAA Group Bhd (MAAG), which failed to get the nod from shareholders for a proposed privatisation exercise by its major shareholder, will focus on finding a new business to exit its Practice Note 17 (PN17) status.

Executive chairman and controlling shareholder Tunku Datuk Yaacob Khyra said the group would be looking to negotiate with the regulators to allow MAAG to embark on multiple acquisitions of smaller businesses, instead of searching for one large company that makes RM20mil annually under its current restriction as a PN17 entity.

“Nothing’s changed. We’re still trying to comply with Bursa Malaysia’s requirement to look for a new business. But instead of having to find one giant business that can make RM20mil profit, we would like to find five companies making RM4mil profit,” he told reporters after the company’s AGM and EGM.

“So far, we’ve only been looking at big companies because that’s all we were allowed to do. Of course, we have to ask Bursa if we can reconsider that because that makes it much easier.”

Yaacob is hopeful that the regulator will be more flexible with its guidelines.

“If one company goes bust, we can still depend on the other companies and diversify our portfolio,” he said.

Bursa Malaysia had granted MAAG an extension until Oct 31, 2019, to submit a regularisation plan.

MAAG’s PN17 status is not due to inadequate financials but due to a lack of business after selling off the bulk of its assets.

In June 2016, the group disposed of its 75% stake in MAA Takaful Bhd (now known as Zurich Takaful Malaysia Bhd), a subsidiary engaged in takaful business, to Zurich Insurance.

Yaacob said it’s not possible for MAAG to find a business within the financial services segment of the right size.

“In the financial services sector, you have banks. To buy a bank you need a few billion ringgit. To buy a stockbroker you need hundreds of millions of ringgit. We’re already out of the insurance industry and to buy an insurance company would require hundreds of millions of ringgit.

“So, to buy a company within the financial services industry will be hard. We want to be in the financial services business and grow our insurance business (in the Philippines). We are still looking but the economic situation now is not so good. So we have to be careful with what we find,” he said.

On Feb 27, 2019, MAAG’s major shareholder, the Melewar group, which is controlled by Yaacob, had proposed to take MAAG private via a selective capital repayment (SCR) exercise with a repayment of RM1.10 a share.

This, however, raised questions on whether the price was fair. This is because the company’s net asset per share stands at RM1.94 – which is 84 sen higher than the SCR price. MAA is a cash-rich company, which also has no borrowings.

At the EGM yesterday, shareholders owning 69.8% of the shares had voted in favour of the SCR but 10.77% had objected to the plan. MAAG needed 75% of the shares for the SCR to go through.

Yaacob said the offer was meant to realign the share price.

“Because of the SCR, the share price moved from 50 sen to RM1. Shareholders feel that the fair price of the company is RM1.90 and we should be trading at RM1.90, if MAAG is valued properly. The problem is that up to now, no one has valued it properly. Everyone is only prepared to pay 50 sen.

“But if shareholders feel that the share price is worth RM1.90, then that’s how much they should pay. Why are you saying “give me more? Instead of RM1.10, you want RM1.30. Don’t ask what we should give you. Ask what you will pay for your company. If you say the company is worth RM1.90, then pay RM1.90,” he said.

MAAG’s share price plunged 20% or 20 sen to 79.5 sen yesterday following news that the proposed SCR had fallen through.

Yaacob said regulations forbid another takeover offer for at least 12 months.

“I’m not making another offer. Technically I can’t for another 12 months under the takeover code. But I don’t intend to make another offer again,” he said.