Sunday, March 18, 2012

EPF books Rs. 800 mn. capital gain selling JKH stake

The Employees Provident Fund has booked a capital gain of around Rs.800 million by selling off its 8.85% stake in John Keells Holdings to Malaysia’s Khazanah Nasional Bhd, for Rs.14.5 billion paying Rs.194 per share in the second biggest deal ever done on the Colombo Stock Exchange.

 "I haven’t got the final figures yet but it’s around Rs. 800 million." Central Bank Governor Ajit Nivard Cabraal said yesterday. "The EPF held the shares for about four years with the bigger quantities held for around two years. In addition to the capital gain, the fund enjoyed dividends and made trading profits on the share."

The Governor said that the buyer which is the Malaysian Government’s investment arm has financial muscle similar to that of Singapore’s Temasek Holdings and was almost a replica of Temasek. Khazanah is chaired by Malaysia’s Prime Minister.

"The entry into JKH offers Khazanah and its group of companies opportunities to participate across a wide range of businesses where the JKH group is involved in. At the same time, it allows Khazanah to participate in Sri Lanka’s positive growth story, and is in line with our strategy of investing in the region," Khazanah managing director, Tan Sri Azman Mokhtar said in a statement on Friday.

Malaysia’s CIMB group with which John Keells Stockbrokers recently tied up is 32% owned by Khazanah. CIMB and Bank of America Merrill Lynch were joint advisors to Khazanah on Friday’s deal which was second in size only to the acquisition of a major slice of Sri Lanka Telecom by Malaysia’s Maxis group.

The Business Times in Kuala Lumpur yesterday reported the deal saying that Sri Lanka is currently experiencing a strong economic revival as evidenced by recent economic growth of about 8% a year.

Cabraal said that Khazanah buying into JKH was a vote of confidence on Sri Lanka internationally and would send a very good signal to other global investors. Business leaders concurred with this view.

Foreign interest in Sri Lanka’s stock market was lacking last year, analysts noted. However, the picture has changed this year with several interested investors looking at possibilities.

Khazanah’s Azman said that Sri Lanka has been a ``positive experience" to companies in which the Malaysian Fund has invested. He noted that Dialog Axiata group in which Khazanah held a stake was the largest mobile telephony player here. The CIMB group has an investment banking joint venture in Sri Lanka.

Earlier this month, CIMB entered into a strategic collaboration with JKH’s stock broking unit, John Keells Stockbrokers (Pvt) Ltd.. to promote and facilitate trading on the Colombo Stock Exchange (CSE) and provide co-branded research for JKSB clients.

The Business Times (of Malaysia) said that Khazanah’s entry into JKH was through its special purpose vehicle Global Hill Investments Limited.

The deal has been under discussion for about six months and has been concluded at a price considerably higher than the Rs.160 level at which JKH was traded earlier this year. Many investors sensing that the EPF may book a capital gain on its JKH stake bought into the company expecting an upward movement in the JKH share price.

Mr. Sohli Captain remains the top shareholder of JKH with 13.7% with Paints and General Industry controlled by him holding 3.9% and other connected parties hold up to another 3.2% according to JKH’s interim report covering the nine months ended December 31.

Khazanah will now become the third biggest shareholder of the blue chip conglomerate behind Captain and Janus Overseas Fund which owns 10.3%. Janus Aspen Overseas Portfolio Fund connected to Janus Overseas Fund owns 2.3%.

source - www.island.lk

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