Mokhzani on the prowl

by **Cals** Sat 13 Jul 2013, 11:27

Published: Saturday July 13, 2013 MYT 12:00:00 AM
Updated: Saturday July 13, 2013 MYT 6:54:16 AM
Mokhzani on the prowl

BY TEE LIN SAY
[You must be registered and logged in to see this link.]

Published: Saturday July 13, 2013 MYT 12:00:00 AM
Updated: Saturday July 13, 2013 MYT 6:54:16 AM
Mokhzani on the prowl
[b style="margin: 0px; padding: 0px; border: none;"]BY TEE LIN SAY[/b]
[You must be registered and logged in to see this link.]
[You must be registered and logged in to see this image.]
Mokhzani: ‘Opportunities will con tinue to pres en t thems elves to thos e who have the righ t ass ets , financial resources, manpo wer, track recor d and r isk appe tite.’
[b style="margin: 0px; padding: 0px; border: none;"]He and his adviser Yeow is on the lookout for the best deals in town[/b]

DATUK Mokhzani Mahathir is a man of the moment having secured a cash hoard as a result of the SapuraKencana Petroleum Bhd merger. Mokhzani’s interest in new investments has been clear from recent transactions in the market.
Together with his key lieutenant Yeow Kheng Chew better known as KC, they appear to be on the prowl for the hottest investments in town. Sources say that they have been approached by dealmakers, who have been gleefully courting them with potential deals.
Having Mokhzani’s name as a key investor undeniably increases the brand value of any company. Little-known Yinson Holdings Bhd is one case in point. News that Mokhzani, via his vehicle Kencana Capital Sdn Bhd would be taking a 15% placement in the company, had added to the bullish sentiment on the stock which has rallied by more than RM1.50 in less than a month. Today, the stock price is a respectable RM4.95.
So what is the modus operandi for Mokhzani’s yield hunting?
Mokhzani works in a team with his partner KC, who has been with him since his Tongkah Holdings Bhd days back in 1987. Presently KC is a non-independent executive director of SapuraKencana. He is also the executive vice-president for the corporate finance and treasury division in SapuraKencana.
In Kencana, Tongkah and Pantai Holdings Bhd (all during Mokhzani’s tenure), KC was already holding key positions, namely as executive director. KC is also a director in Kencana Capital.
Kencana Capital is a cornerstone investor in IHH Healthcare Bhd and Astro Malaysia Holdings Bhd.
So far, these IPO investments have bore fruit save for Astro, which is still trading at around its IPO price of RM3. IHH is 41.79% up from its IPO price of RM2.80.
In email responses, Mokhzani says that Kencana Capital looks at both short-term and long-term investment opportunities. Presently, most of its investments are in Malaysia.
“Our longer-term investments are mostly in property, which included investments with Capital Land, UOA and in Menara SapuraKencana. Of course, we have significant investments in the oil & gas (O&G) sector. We do have some exposure to the information technology sector but we are divesting,” says Mokhzani.
He added that Kencana Capital does not set targets in terms of number of investments, it’s size or holding period.
“We also don’t have a specific amount of funds to invest. Having gone through two boom and bust cycles, we’re quite conservative in our investment outlook, tenure and targets,” adds Mokhzani.
Sources say that Mokhzani’s name was linked to upcoming special purpose acquisition company Sona Petroleum Bhd as a possible cornerstone investor.
On this note, Mokhzani says that the promoters of Sona Petroleum are known to him, being that the oil and gas industry is indeed a small community and he’s been a part of it since 1987.
“However, we did not participate in the new listing,” he confirms. .
Kencana’s most recent interest is Yinson, an up and coming floating production, storage and offloading concern, Last month, Yinson says it would issue 37.81 million new shares, or 14.64% of its enlarged capital spread, to Kencana Capital, raising RM106.62mil.
This investment would indeed be profitable. This is because Mokhzani will be taking up the shares in Yinson at RM2.82, or a discount of 15.8% based on the RM3.55 per share price prior to the private placement announcement. At Yinson’s current share price of RM4.95, this would mean that Mokhzani is sitting on roughly some RM80mil in paper gains.
Yinson appears to be in the cusp of big things. It has announced that it is buying Norwegian offshore floating production petroleum company, Fred Olsen Production ASA (FOP), for RM551.34mil. Yinson will buy all the ordinary shares of FOP at RM5.20 each.
On the next big thing to look out for, Mokhzani’s view is that it is the oil and gas (O&G) sector, which will remain robust and exciting for a few years to come.
“I don’t think there will be a ‘next big thing’ to bet on compared to the O&G sector. Maybe energy? The amount to be invested in the O&G sector still seems to be very significant. There are a lot of countries depending on domestic O&G revenue to fund their national budgets. Hence, opportunities will continue to present themselves to those who have the right assets, financial resources, manpower, track record and risk appetite,” he says.
This being the case, it will certainly be interesting to see which company is next on Mokhzani’s buy list.
Sources said that Mokhzani came into “some extra cash” after the merger of SapuraKencana in May last year. This was the result of a massive RM11.85bil merger exercise of two of the country’s prominent O&G players – Kencana Petroleum and SapuraCrest Petroleum Bhd.
Under a cash and share swap deal, a special purpose vehicle called Integral Key Sdn Bhd bought all the assets and liabilities of SapuraCrest for RM5.87bil and Kencana for RM5.98bil.
This was satisfied by some five billion Integral Key shares priced at RM2, and RM1.84bil in cash.
Integral Key acquired SapuraCrest’s business for RM5.87bil equivalent to RM4.60 per share, while it acquired Kencana Petroleum’s business for RM5.98bil equivalent to RM3 per share. At that time, Mokhzani had an indirect 31.7% stake in Kencana Petroleum via his privately-held vehicle Khasera Baru Sdn Bhd. Upon the listing of SapuraKencana, Mokhzani held an indirect stake of 15.93% in the merged entity.
So, Mokhzani’s windfall would have been through the cash portion of the deal, as he is still a shareholder of SapuraKencana. A check on Bloomberg shows that Khasera is still the second largest shareholder with a 13.27% stake.
In the capital repayment for Kencana, some RM968.68mil out of the RM1.84bil would have been returned to shareholders. Using a back of the envelope calculation of Mokhzani’s 31.7% indirect stake in Kencana, he via Khasera would come into cash of some RM307mil.