Khazanah ups stake in CIMB

KUALA LUMPUR: Khazanah Nasional Bhd has increased its stake in Malaysia's second biggest banking group, CIMB Group Holdings Bhd, by 1% to 29.9% in an open market purchase.

Why is Khazanah acting contrary to its long-term objective of slowly divesting stakes in certain government linked companies (GLCs) under a 10-year GLC transfomation programme? Earlier reports also indicated that Khazanah had divested some of these stakes to foreign parties.

Sources indicated that the purchase on Thursday could be a prelude to a bigger objective by the sovereign wealth fund which viewed CIMB as a “core competitive asset” in its portfolio.


Bigger stake: A man walks past a branch of CIMB Bank in downtown Singapore. Sources reckon that Khazanah’s stake increase could be a prelude to a bigger objective as it views CIMB as a “core competitive asset” in its portfolio. —EPA
“CIMB is also part of Khazanah's larger strategy of rebalancing its portfolio in line with the times.

“Khazanah has been a net-seller in the market last year, this move is a prelude for their re-investment into suitable investments. An investment fund (like Khazanah) needs to stay on top of the game - everyday and everytime,” said a source.

Khazanah had, last year, made 13 investments amounting to RM5.8bil but divested eight companies, a move which brought in proceeds of RM7.7bil.

Through this process, Khazanah had generated gains amounting to RM2bil.

“The net gain of RM2bil will need to find its way into the market again, into new avenues of growth.

“This purchase of a stake in CIMB is part of Khazanah's strategy of seeking new sources of growth,” said an observer.

In a presentation early this year, Khazanah managing director Tan Sri Azman Mokhtar said the longer term aim for its companies was to “drive them to become regional champions”.

“Khazanah has been net sellers of our portfolio in the past few years. We have been selling into strength. In the meantime, we are also buying into new growth engines,” Azman had said.

Khazanah aims for three of its companies to be transformed into regional champions - Axiata Group Bhd, CIMB and Integrated Healthcare Holdings which is about to be listed sometime this year.

“Khazanah will drive value creation and enhance crisis preparedness of its portfolio companies, in the context of the ongoing GLC transformation programme and regionalisation initiatives,” it said in a statement earlier this year.

“In addition, Khazanah will further conduct gradual and orderly divestment of non-core assets and non-core holdings, while continuing with strategic divestments of selected companies,” it added.

The most recent divestment for Khazanah was the sale of Proton Holdings Bhd to DRB-Hicom Bhd, from which it had recorded a “profitable modest amount of gain.”