This article first appeared in The Edge Financial Daily on May 12, 2017

KUALA LUMPUR: MMC Corp Bhd, which for some time has been considering the listing of its port assets, wants to create value via the consolidation of its ports before taking it public.

MMC group managing director Datuk Seri Che Khalib Mohamad Noh said with the green light from its shareholders yesterday to acquire the remaining 51% it does not own in Penang Port Sdn Bhd (PPSB) from Seaport Terminal (Johore) Sdn Bhd, the group would be focusing on streamlining its port assets.

“[With full control of PPSB,] we can now consolidate our port assets and that will complete our acquisition for the entire western coast of Peninsular Malaysia ... whether or not to spin off [the port assets], we will look at it later. Let’s bring the value first,” he told reporters after the group’s annual and extraordinary general meetings yesterday.

Other ports owned by MMC include Pelabuhan Tanjung Pelepas Sdn Bhd and Johor Port Bhd, both located in Johor, as well as Northport Bhd in Port Klang, Selangor.

On April 3, MMC’s subsidiary MMC Port Holdings Sdn Bhd entered into an agreement with Seaport Terminal to acquire the remaining 51% of PPSB it does not own for RM220 million cash. The acquisition is deemed a related party transaction as Seaport Terminal, a private vehicle of tycoon Tan Sri Syed Mokhtar Al-Bukhary, is also the largest shareholder of MMC, with a 51.76% stake.

MMC also expects to hand over PPSB’s loss-making ferry operations linking Penang island and Butterworth, to Prasarana Malaysia Bhd within the next two months.

It was reported that Prasarana was a little hesitant about taking over the ferry operations as it would be entering an unfamiliar territory and also because the operations were making losses.

Che Khalib said the transfer of the ferry assets to Prasarana was taking time because of “paperwork”.

“The delay is due to the transfer process because at the moment Penang Port and the ferry services are under one concession. So, we had to [segregate the two] ... it’s a matter of paperwork,” he said.

PPSB entered into an agreement with Prasarana for the disposal of the ferry business on Dec 22 last year.

The ferry business and its accompanying assets are to be transferred to Prasarana for a cash consideration of RM1, said Che Khalib.

“It’s basically a rationalisation of our operations as we do not see ferry services to be fitting to our port operations business. We are port operators [and] not public transport operators.

“We believe Prasarana will be in a better position to [operate the ferry business], but we are not pushing the problem to Prasarana [as] we have transferred to Prasarana not only the ferry operations but also the terminals both on the mainland and on the island.

“These two terminals have quite a huge land bank, and we believe Prasarana will be well suited to this as they are good in transit oriented developments and should be able to develop the land,” he added.

On updates on the memorandum of understanding inked between MMC Port, Sime Darby Property Bhd and India’s Adani Ports and Special Economic Zone Ltd to study the feasibility of developing an integrated maritime city on Carey Island, Selangor, Che Khalib said this would be a long-term project for the group.

“For Carey Island, we think that in terms of the [commencement] of the physical work, the earliest would be by 2020. [Before that,] there is a lot of environmental and social impact studies to be conducted, which we have already started.