FEATURED & ISSUES | NOVEMBER 12, 2013 9:00 PM
Syed Mokhtar Albukhary’s impressive list of assets includes power generation assets, ports, plantations, auto assembly and distribution assets, rice and sugar distribution and banks just to name a few. While it is difficult to gauge his wealth, in this first of a two-part series, KiniBiz shines a spotlight on the tycoon’s sprawling empire and looks at a breakdown of his assets.
At its close on Friday, MMC Corp, Syed Mokhtar Albukhary’s flagship, had a market capitalisation of about RM8.22 billion. This would indicate that Syed Mokhtar’s 51.76% equity in interest in MMC would have a market value of RM4.25 billion.
His other main holding company is DRB Hicom which closed at RM2.56 giving it a market capitalisation of RM4.95 billion. This would give his 55.92% a market value of RM2.77 billion.
Thus collectively the stakes in the two companies are worth in excess of RM7 billion.
Early this year Forbes ranked Syed Mokhtar as Malaysia’s seventh richest with a net worth of some US$3.3 billion or about RM10.5 billion.
Nevertheless getting to the bottom of his actual wealth is not a simple matter, as his assets are diversified and his shareholdings fragmented.
“There are so many assets linked to him, parcels of land in Johor, and now people are saying he’s part of Eco World Development (Sdn Bhd)…so many assets link back to him. Maybe only he knows his actual asset worth,” a source familiar with the tycoon said.
Difficult to gauge his actual wealth
This is not including the stakes, sources say belong to him, but where he doesn’t surface such as in Bina Puri Holdings where Syed Mokhtar’s private company Jentera Jati Sdn Bhd has 15.91%, in the construction company, translating to a market value of some RM19.73 million.
There are also other companies such as Megaplace Sdn Bhd a private company linked to his brother Syed Azmin Mohd Nursin @ Syed Nor which has 23.57% in Amtek Holdings Bhd, which has a market value of RM2.77 million.
While these two do not add much to his net worth (considering his shareholding in MMC and DRB amounts to RM7 billion) it does give some form of indication of how the tycoon managed to remain below the radar for so many years.
A sprawling empire
While these three companies are officially his, there are whole host of others he has been linked to over the years, including Star Publications (M) where he had 20% at the IPO, Padini Holdings Bhd, Latitude Tree Holdings, Elba Holdings, Eden Inc, Pilecon Engineering, IJM Corp and Oriental Garments to name a few.
And this list is from his biography released earlier this year.
There are others counters as well such as scrap metal trader SMPC Corp Bhd which he was said to have a huge stake of some 20% for many years.
Anyway let’s take a look at a breakdown of some of his assets.
A news report from then had it that Syed Mokhtar got his “hands on a company sitting on RM633 million in deposits, and investments – quoted and unquoted – amounting to RM2.16 billion.”
As at end June this year MMC had deposits, bank and cash balances of RM4.94 billion, while on the other side of the balance sheet it had long term debt commitments of RM21.26 billion and short term borrowings of RM2.42 billion.
(We look at his high debt level in another piece)
As for its assets, MMC has 30.9% in Gas Malaysia, a company with a market capitalisation exceeding RM5.16 billion, and 39.2% in civil engineering outfit Zelan. Zelan has not been faring well and only had a market capitalisation of RM160 million at its close of 28.5 sen last Friday.
Then there’s power generator Malakoff Corp where MMC has 51% equity interest. Malakoff posted net profits of RM468.2 million in FY12. Malakoff recently let its approvals for a floatation exercise lapse, and reports have it that the company is looking to issue debt papers, to help settle debts.
Under MMC itself there are a few assets where value can be unlocked such as his port assets, made up of Port of Tanjung Pelepas Sdn Bhd, which is Malaysia largest container port by throughput volumes, Johor Port Bhd, and soon to be included Penang Port Sdn Bhd.
While there are rumours that he has tried to take over NCB Holdings Bhd, which wholly owns Northport (M) Bhd, which is part of Port Klang, these rumours cannot be verified.
There has been talk that he has attempted to buy Kelang Port Authority, 5.32% for starters but the port authority has been reluctant to sell.
Other assets that could be floated are Aliran Ihsan Resources which has the operations and maintenance of water treatment plants, Southern Water Corp Sdn Bhd and and Aliran Utara Sdn Bhd. But Aliran Ihsan suffered marginal losses in FY12.
There’s also MMC’s multi billion ringgit Klang Valley MRT project where, partnering Gamuda, it is the project delivery partner.
Considering all the assets, MMC for its six months ended June this year posted net profits of RM52.68 million from RM3.24 billion in revenue.
Just a few weeks ago, DRB proposed to acquire 61.6% of haulage and transportation company Konsortium Logistik for RM1.55 per share or some RM241 million.
Other assets under its belt include national automaker Proton Holdings. DRB forked out RM5.50 a share or almost RM1.3 billion for Khazanah Nasional’s 42.74% equity interest and privatised Proton Holdings for slightly over RM3 billion.
There’s also Pos Malaysia where DRB has 32.2% equity interest, it acquired for RM622.8 million from Khazanah as well.
Other than Proton and Pos Malaysia, there’s also assets such as Honda Malaysia Sdn Bhd where DRB has 34%, Bank Muamalat in which DRB has 70% equity interest, wholly owned Puspakom Sdn Bhd, wholly owned Edaran Otomobil Nasional and Proton Edar Sdn Bhd, DRB Hicom Defence Technologies Sdn Bhd, 97.37% of Alam Flora Sdn Bhd and wholly owned Lotus Group International Ltd, to name a few.
However despite its impressive asset base, DRB’s financials have been wanting. For its three months ended June this year, DRB posted a mere RM10.26 million in net profits from RM3.05 billion in sales.
In a bidding war back in December 2004, Syed Mokhtar edged out the late Malaysian motor czar SM Nasimuddin SM Amin of the Naza group. Syed Mokhtar bid RM3.60 per share, 10 sen more than Nasimuddin for a controlling 15.8% held by the family of the late Yahya Ahmad, after which he strengthened his grip on the company via the injection of Bank Muamalat Bhd into the company.
Not to be forgotten is his other flagship Tradewinds Corp Bhd which was privatised and delisted in end September this year.
While the margins for Tradewinds Corp’s results are impressive, the company’s asset base is truly amazing. Among those that are more well-known include Tradewinds (M) which has Padiberas Nasional (Bernas), Central Sugars Refinery Sdn Bhd and Tradewinds Plantations among a whole host of other assets.
According to filings which accompany its financials, as at end June this year Tradewinds Corp’s total assets stood at RM3.56 billion.
Since Tradewinds Corp has been privatised it is difficult to put a price tag on the company, but nevertheless it could be worth more than the RM3.56 billion if stripped.
Bernas at its close on Friday had a market capitalisation of RM1.67 billion. It is also noteworthy that Bernas could be voluntarily withdrawn from the Bursa Malaysia as Syed Mokhtar’s companies had collectively about 83.69% control of Bernas.
Other than Syed Mokhtar, the only other shareholder with clout in Bernas is Cabinet Minister Shahidan Kassim who via his vehicle Batu Bara Resources Sdn Bhd has about 4.8% equity interest in Bernas. Other notable shareholders include Pertubuhan Peladang Kebangsaaan with 3.71% interest, and Persatuan Nelayan Kebangsaan which goes by the acronym Nekmat controlling a 3.42% stake.
Tradewinds was formerly known as Pernas International Holdings.
Back in 2002 Syed Mokhhtar’s Restu Jernih Sdn Bhd, acquired 32% of Pernas International Holdings for RM497 million or RM2.10 per share and 64 sen per warrant from an ailing Perbadanan Nasional Bhd known as PNS.
Since then he has restructured the once ailing Tradewinds and considerably transformed the company.
In 2002 the price Syed Mokhtar paid for Pernas International Holdings was more than a few hundred percent premium to its trading price, which many considered a bailout.
To put things in perspective, Pernas was set up in 1969 to promote Malay capital ownership, but the lumbering giant corporation failed in its agenda, and bled losses for the longest time.
At that time one of Syed Mokhtar’s general had said, “We don’t cherry pick,” when asked to comment about his acquisition of Pernas.
Based on these assets alone, Syed Mokhtar’s clout in corporate Malaysia is evident. The fact that he has built up his wealth over a span of 20 odd years is remarkable.
But considering his is a rags to riches story, how did he do it?
Tomorrow: Syed Mokhtar, the early years
Although it is a complete account in brief about Syed Mokhtar’s success story, the intention is obvious.
The fact is that the Al Bukhary Group acquired the various corporations, businesses and projects at premium values. On top of that, the Group realised their own internal funds and raised their own financing from the capital and financial markets on their own strength and merit.
Majority of these acquisitions are actually rescue missions, to turn around ailing business groups and projects with the initial intention to realise the national service.
Example is the Pernas International Holdings. The hotel group with powerful brands such as Hilton and Meritus in Malaysia, was initially an MBO when Pernas Chairman Tunku Tan Sri Shariman Tunku Sulaiman took over the Group and Tradewinds.
When Tunku Shahriman could no longer service the financial commitment for the MBO, Al Bukhary Group took over. The Pernas International Group was consolidated and restructured.
The interesting bit about this story is that it would be reference for all the strikes against Tan Sri Syed Mokhtar and Al Bukhary Group. The Opposition and all those who wanted to see the Malay Agenda or New Economic Policy (NEP) fail, would demonise Syed Mohktar and Al Bukhary Group as an UMNO crony.
‘Cronysim’ is a dirty word depicted by Anwar Ibrahim’s camp when they tried to start a revolt within UMNO and topple Tun Dr. Mahathir Mohamad’s Presidency and Premiership. as far back as 1997. The opportunity presented itself when Neo Con Jewish hedge fund George Soros attacked Ringgit Malaysia and almost brought down the economy to its knees, when the domino effect almost tumbled the KLSE.
As a result, the Malaysian banking system almost crumbled due to the bursting of the economic bubble and over-gearing arisen from pledging of over valued shares.
At the time, the guns were trained on Malay corporate giants such as Tan Sri Tajudin Ramli, Tan Sri Halim Saad and Tan Sri Rashid Hussain. All of these successful Malay billionaires borrowed from commercial means to expand their respective business domain and did their bid for national service.
In fact, some of the feats they did were extraordinary, considering the mitigating circumstances and challenges 15-20 years ago.
The anti-NEP detractors now conveniently use and abuse the goodname Syed Mokhtar and Al Bukhary Group as the bogeyman in the UMNO tradition to maintain cronyism amongst Malay entrepreneurs.
The typical ghastly scenario they picture is that “Syed Mokhtar is given national projects, systematically taking over GLCs and awarded huge long term contracts and concessions, all on borrowings. If he cannot sustain, due to the corruption and inability to be comptetive in the open market, then the bubble will burst again. The Malaysian Government would have to mount another ‘bail out’, where as so many layers of corrupt UMNO politicians already made their money along the way”.
The fact is that they cannot substantiate this fallacy, with Syed Mokhtar and Al Bukhary Group.
Every single acquisition and take over that were carried out and transacted are at premium value. The funds and borrowings for all these corporate exercise are raised via commercial means on their own merits and financial strength. Often, more resources are needed to be injected into these corporations and projects. The immediate next step there on is to consolidate all operations and holdings. Then the restructuring and transformation begins.
In the Jose Barrock article above, it is proven that acquisitions, consolidations, restructuring and expansion of operation made the Al Bukhary Group stronger and financially sound.
Most importantly, every single business units finance and service their operations and borrowings. As a result, Al Bukhary Group could prove that all the financial standing and value of these corporations have actually been increased.
Another interesting fact is that the same decorators, be it Opposition Leader Anwar Ibrahim, DAP Secretary General Lim Guan Eng and his minions such as Tony Pua and all the personalities, NGOs and media bodies which favoured and focused to use Syed Mokhtar as the convenient target to demonise the Malaysian Government and UMNO for upholding the Bumiputera Economic Agenda, are silent about other entrepreneurs.
They never question Non Malay Club of Super Aces entrepreneurs in the likes of Tan Sri Ananda Krishnan, Tan Sri Francis Yeoh, Tan Sri Lim Kok Thay and Tan Sri Vincent Tan for all the opportunities that they have gotten and still continue to benefit from their long and strong relationship fostered with Malaysian Government and UMNO leaders.
In fact, Anwar Ibrahim then as the powerful duo-job Deputy Prime Minister and Minister of Finance has his own set of cronies.
They too, like other tens of Non Malay billionaires and multi millionaires have ‘Sprawling Empire’. They have immensely benefitted from the continuous Malaysian Government contracts and ‘strategic partnership and relationship’ as suppliers, contractors and even operators to corporations and GLCs.
Worse still, many of these Non Malay multi millionaires now even support DAP either politically or financially.
The continuous effort to bring Syed Mokhtar and Al Bukhary Group into the line of media attention is without a sinister agenda. A successful story via commercial means and bankable practices of apolitical Malay entrepreneur is the proof that the NEP works, given time, right opportunities and even through the stringent market test.
The truth is that Syed Mokhtar is an model of a Hijrah Man. He brought commercial, cultural and social transformation and was successful at that. That is something some of the minority could not live with.