Highlight EPF will not trim stake in CIMB

by **Cals** Thu 30 Oct 2014, 23:26

Highlight
EPF will not trim stake in CIMB

DUBAI (Oct 29): The Employees Provident Fund (EPF) will not pare down its stake in CIMB Group Holdings Bhd ([You must be registered and logged in to see this image.]Financial Dashboard) although Bursa Malaysia disallows the provident fund to vote on the merger of three banks in which it holds substantial stakes, said chief executive officer Datuk Shahril Ridza Ridzuan.
“There is a lot of speculation in the market ... we will not change our investment strategy,” he told The Edge Financial Daily on the sidelines of the 10th World Islamic Economic Forum (WIEF) yesterday when asked about talks of the EPF trimming its stake in CIMB to garner voting rights.
“We do not think this particular decision should give cause for us to change our own investment strategy, it’s just that we need to look in the future, [especially on] how do we manage our investment strategy to avoid this kind of perceived conflicts,” said Shahril.
He reiterated that there was no “real conflict of interest” for the EPF to vote on the merger involving CIMB, RHB Capital Bhd ([You must be registered and logged in to see this image.] Financial Dashboard) and Malaysian Building Society Bhd (MBSB) ([You must be registered and logged in to see this image.] Financial Dashboard).
“There is no real conflict of interest because we (the EPF) basically gain no benefit from this transaction (the merger). There is a perception of a conflict of interest and that is preventing us from voting and it is [a cause for concern] in this kind of situation because if we were against the merger, we actually lose our chance to block it,” said Shahril, who was speaking at the WIEF.
He said the provident fund’s advisers will discuss with Bursa Malaysia to understand the latter’s concerns about the matter within the next few weeks.
“We will be touching base with Bursa Malaysia to explore its reasoning for not letting us vote in this particular case and we will see what we can do after that,” Shahril said.
To recap, Bursa had decided to deny the EPF’s voting right on the trio-merger on the grounds that the provident fund is a common major shareholder of all the three affected companies. Furthermore, as the single-largest shareholder of MBSB and RHBCap, this had created a potential conflict of interest in which the regulator stated that the EPF might be able to influence the proposed merger to its own benefit.
Shahril said the pension fund has substantial shareholdings in more than 100 companies and obtained waivers from the local bourse for voting rights in the past.
“With regard to our previous exemptions in the past, I guess Bursa Malaysia has a different opinion in this case. Bursa Malaysia has made its decision and we (the EPF) feel that our right to vote is important to us, [considering] the fact that we represent the interests of 14 million EPF members, and it is unfortunate that we have ended up in this situation,” he added.
This article first appeared in The Edge Financial Daily, on October 30, 2014.