THE MALAYSIAN GOVERNMENT is embarking on a new round of reform for government-linked companies (GLCs) to gradually reduce the government’s role in driving the economy. It is aimed at rejuvenating the private sector as the key engine of growth for the economy. The question is: Is the initiative for real this round or just another round of window dressing? T h e G o v e r nme n t h a d a l r e a d y previously initiated measures to ensure that the GLCs restructure their operations to focus on their core businesses in a bid to enhance their business prospects. This time, it has been reported that the Government is seriously looking again to pare down the equity stakes of GLCs by governmentl i n k e d i n v e s tme n t c o r p o r a t i o n s (GLICs).

Khazanah Nasional Bhd recently placed out a 5% stake or 55 million shares in Malaysia Airports Holdings Bhd (MAHB) on Sept 10 (see Chart 1). Subsequently, Khazanah Nasional said that it had also placed out around 87 million existing shares or a 2% stake in Tenaga Nasional Bhd recently to institutional investors at RM8.10/ share at a 4% discount to the closing share price (see Chart 2). This raised proceeds of RM703 million but reduced Khazanah’s stake in Tenaga slightly from 37.8% to 35.8%. There are also rumours that two other Khazanah-related companies, namely, CIMB Group Holdings, in which Khazanah owns a 28.0% interest, and Pos Malaysia Bhd (where its stake is 32.2%) may have also been chosen as targets for Khazanah to sell down is stakes. These two counters saw large off-market share placements recently as well. Pos saw 25 million shares, or a 4.7% stake, traded off market at RM2.30 per share on Sept 11, 2009 while 30 million CIMB shares, or a 0.8% stake, were traded off-market at RM10.38 per share a day earlier. It is widely believed that should Khazanah Nasional place out its holdings in more GLCs and thus increase their free float and liquidity, it will unlock more value in these GLCs and enhance the attractiveness of the local bourse for global investors.