Some twelve million EPF members are in for a windfall as the huge profit stream from Plus will directly boost yearly interest payout to exceed the current average of five percent, though earlier MMC Corp and Asas Serba proposals to buyout Plus are rejected.
The government has given the nod for the Employees Provided Fund to acquire Malaysia's largest tolled highway operator, Plus Expressways Bhd, putting an end to the attempts of two private companies to take over the Khazanah-owned entity.
EPF’s late-entry acquisition pips the proposals made separately by Tan Sri Syed Mokhtar Al-Bukhary’s MMC Corporation Bhd and Tan Sri Halim Saad’s Asas Serba Sdn Bhd to buyout Plus through Khazanah Nasional Bhd, which directly owns 16.74% of Plus and has an indirect stake of 38.51% via UEM Group.
Raising the roughly RM11 to RM12 billion to pay for the 55% of Plus shares now in Khazanah’s hands is considered as “loose change” as EPF has RM402 billion in total asset allocation as at March this year and would not require the pension fund to resort to the debt market.
The shifting of a large chunk of a government controlled asset from one institution to another, is seen as the end of strategic assets being placed in the hands of individuals and ushering a new era of compliance on public accountability.
At a stroke, some 12.7 million EPF members will enjoy a windfall, as analysts compute the added cash flow from Plus to EPF will see its members gaining an extra one or two percent in annual interest payout from the present average of 5 percent.
In recent weeks there has been an unprecedented surge in the share price of Plus, touching its all-time high recently of RM4.32 on September 1 from its 52 week low of RM3.20.
Commenting on the government’s move to shift a strategic asset from one institution to another as it matures, in this case transferring Plus from Khazanah to EPF, a senior local banker said, ”It really is a way of sharing corporate profits directly with the public so people can gain from well run business operations within the government stable.”
A stock analyst familiar with the deal adds that the government has taken a lot of brickbats in the past for awarding contracts to individuals and this move marks the end of an era of placing strategic assets in the hands of individuals.
“Almost all the past corporate debacles stemmed from individuals being trusted to manage national assets or assets of strategic importance. However, a mix of over-gearing and perhaps, over-ambition, led to their eventual failure which saw the government being forced to bail them out.
“In fact, Plus was once under the Renong Group and Khazanah was asked to take it over, rehabilitate the company and put in place a strict code of corporate governance.
Plus today is a really top-notch operation that is rated one of the world’s top five tolled highway operators.
“From Putrajaya’s viewpoint, it makes sense to transfer Plus to another state institution that pays out dividends directly to millions of Malaysians. We have to see this as a signal from the present administration that they are using a fresh approach to pass on profits generated by state-controlled companies to the man-in-the-street.
At the same time, the old practice of awarding large-scale state assets to individuals has come to an end,” he said.
The Plus purchase caps an acquisition spree by EPF which saw it take control of property developer MRCB and bank holding company RHB Capital, as a means of controlling large-scale profit generators to pay out a steady dividend pipeline to its members.