Hextar Capital paying the premium to play the telecom game

HEXTAR Capital Bhd’s decision to raise its stake in Binasat Communications Bhd may look like a bold strategic play, but the price tag is what that has turned heads.

The group, via its unit Opcom VC Sdn Bhd, agreed to buy an additional 3.19% stake at 21 sen per share – a hefty 75% premium over Binasat’s recent market price of 12 sen.

This raises its interest in the telecommunications support service provider to 25.73%.

That makes this one of the highest premiums ever paid for a significant stake in a Bursa Malaysia-listed company, even surpassing the over 70% premium seen in the high-profile MMC Corp Bhd privatisation in 2021.

For context, premiums in Malaysian corporate acquisitions usually range far lower, often between 10% and 40%.

Paying this much over market raises a key question: What does Hextar Capital see in the loss-making Binasat that the market does not?

The company justifies the move by pointing to synergies – particularly the ability to use Binasat as a platform to expand deeper into the telecommunications sector and strengthen its competitive position in securing future contracts.

Hextar Capital, a diversified group best known for its plantation and chemicals links, has been trying to carve out new growth avenues.

Telecommunications infrastructure fits the bill, given the government’s ongoing push for 5G rollout and digital economy initiatives.

Still, investors will note the risks. Binasat’s market capitalisation stands at just RM72.5mil, and its shares have barely moved despite the premium-laden deal, closing unchanged at 12 sen on the day of the announcement.

Hextar Capital, on the other hand, saw a modest uptick, rising 4.55% to 23 sen.

The muted market reaction suggests that shareholders remain unconvinced that the hefty premium will translate into proportionate value creation.

In short, Hextar Capital’s gamble is clear: it is paying top dollar to gain a foothold in a niche player, betting that the upside from telecom opportunities will more than justify the cost.

Unless Binasat can quickly deliver contract wins or scale its operations meaningfully, Hextar risks being seen as a company willing to pay too much for too little.