Khazanah Blows Another RM7.93 Billion Of Taxpayers’ Funds

By Syed Akbar Ali

Friday, August 13, 2010

That’s what the papers say. You can read it here. Some quick extracts here :

PETALING JAYA: Khazanah Nasional Bhd had secured a 64.1% level of acceptances in its voluntary general offer (VGO) for the takeover of Singapore hospital group Parkway Holdings Bhd as at Tuesday.

..had received 458.37 million shares, or 40.2%, of Parkway.

.. included Fortis Healthcare Ltd’s 23.9% stake in Parkway.

…23.8% stake by Khazanah, … Khazanah already has a 64.1% acceptance level.

The deal will see Fortis’ billionaire brothers, Malvinder Singh and Shivinder Singh, walk away with a profit of S$116.7mil or RM272.0 million

.. Khazanah will end up forking out about S$3.4bil (RM7.93b) for the remaining stake it does not own.

Now that Khazanah has gained control of the much sought-after hospital group, comes the bigger task – which is to work up the assets and ensure bigger returns in the coming years.

Here is a picture of Malvinder Singh. He does look RM272.0 million richer doesn’t he? Paid for by you and me, the Malaysian taxpayer. Thank you Khazanah. Bijaknya kau orang niaga.

So our smart alecks at Khazanah have just blown another RM7.93 billion to buy up more shares in Parkway Holdings of Singapore. Including the amount that Khazanah has already paid for its existing 25% stake in Parkway, it means that our Khazanah Nasional Bhd has invested over RM10.0 billion of our money across the causeway in the Kiasu Republic.

First of all what do Tokpa and Mukhriz Mahathir (of MITI) have to say about this? Here we are lamenting that Malaysia now attracts less FDI than Bangladesh, Laos or Burkina Faso. We are worried because less FDIs mean less money coming in, less development, fewer new jobs being created for our unemployed people, less technology transfer and so on.

So how do we justify our very own Khazanah Nasional Bhd taking RM10.0 billion of taxpayers’ funds and investing it in the Kiasu Republic? How many jobs will this RM10.0 billion investment create for Malaysians? Itu Melayu Agenda apa jadi? Or is that not relevant anymore? How many Malaysians will get jobs from this RM10.0 billion investment in Singapore ? Tolong cerita sikit?

Here is something else that does not gel at all. It is Khazanah Nasional Bhd’s stated policy (wow don’t I sound like a diplomat here) to sell off non core businesses and focus on “core activities”. Don’t ask what that means because Khazanah sendiri tak faham apa dia cakap.

Never mind lah. They went ahead anyway and, for example, they sold out of Pos Malaysia Bhd (which is a monopoly lah dunggu, why in the name of ketupat would anyone want to sell out a stake in a monopoly business in your own country? Where did you all learn to do business?)

Then they take the money saved or gained from selling out of these so called "non core businesses" and buy hospitals companies instead in Singapore from Punjabi greenmailers from India? Ini tak masuk akal sikit.

Do you mean to tell me that Parkway, an obviously Singaporean company which runs health services around Asia and Singapore is now Khazanah’s core business? And Pos Malaysia Bhd, an almost natural monopoly in Malaysia, that is also largely owned by the Government, is not a core business?

Ok lah lets not be such a wet rag. So Khazanah has now spent over RM10.0 billion (yes kawan-kawan, these dunggus have spent over RM10.0 billion buying up this Singapore company called Parkway) can Khazanah generate at least RM1.0 Billion in returns per year from this RM10.0 billion investment in Parkway Holdings ? Hah? Tak boleh kah? But RM1.0 billion is only 10% return on investment lah. 10% pun tak boleh ke?

Here are some investment alternatives. If they put RM10.0 bilion in Fixed Deposits in Alliance Bank, Khazanah will earn 3.65% per year. Sure can one. And you know what? Alliance Bank FD is Syariah Compliant too. Fuyyo. Pahala pun dapat.

But surely Khazanah can generate better returns than 3.65% by Alliance Bank? But how much better? Well in comparison ASB can generate say 8% return per annum. Surely Khazanah can do better than ASB’s 8% return per annum? So a 10% return on investment from a company like Parkway should be chicken feed for Khazanah Nasional Berhad.

So since Khazanah has invested over RM10.0 billion in Parkway, can we expect Khazanah to generate at least 10% or RM1.0 billion every year from Parkway Holdings? Boleh ke tak boleh?

Well here are some financial results for Parkway for the 2^nd Quarter of 2010 :

First half revenue and net profit (excluding exceptional items, net of tax) increased 8% and 18% year-on-year respectively

· Strong performance of Singapore and International Hospitals segment

§ Q2 revenue rose 9% year-on-year to S$271.6m from S$249.4m

§ Q2 net profit (excluding exceptional items, net of tax) grew 25%

And you can also look at Parkway Holdings Financial Results as at 30^th June 2010 here. For six months, as at 30 June 2010, Parkway Holdings had revenues of S$519,136,000 (RM1.2 bil). From this amount they made a profit of S$66,481,000 or RM153.0 million (for six months).

Alamak !! Their profit for the first six months of 2010 is only RM153.0 million. Even if we double it up for the whole year of 2010, we get a profit of only RM306.0 million. That is only about 3% return on an investment of RM10.0 billion lah.

Khazanah might as well put the money in Fixed Deposits at Alliance Bank. Can get higher returns lah 3.65% - and Syariah Compliant too. I say man, yennadey? Hello kawan, panggil balik itu bayi fellows and ask them to buy back their Parkway shares lah.

Ok lah. Lets give Khazanah a chance. Lets give them the benefit of the “we don’t know what the hell they are doing” doubt and let us pray that Khazanah can perform miracles and increases Parkway’s profit by 100% in 2011.

Even with a 100% jump in profit, it will only be RM612.0 million profit in 2011. That is only about 6% return on an investment of RM10.0 billion. That is less than ASB or EPF’s dividends for one year.

Why go to all that trouble, invest taxpayers funds in non core businesses in a foreign country (the Kiasu Republic), take RM10.0 billion out of our economy (reverse FDI or “duit sudah lari”) and then only generate 3.65% return (most likely) or 6% return (highly unlikely) on investment ?

To conclude here is something really funny from the Star’s report : “Now that Khazanah has gained control of the much sought-after hospital group, comes the bigger task – which is to work up the assets and ensure bigger returns in the coming years.”

Can anyone guess how Khazanah is going to do this? Here is the answer:

Ring..ring.

Hellooo.

Mr Con-sultan. Are you there?

Well hello Mr Khazanah. Yes its Con-sultan here. And how is your bank account today?