Khazanah not currently in talks to sell stake in joint ventures with Temasek

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(Aug 24): TALK of Khazanah Nasional Bhd seeking to sell its stake in M+S Pte Ltd resurfaced this week - this time in a report by a Malaysian newspaper.

M+S - a 60:40 joint-venture company with Singapore's Temasek Holdings - is the developer of two iconic mixed-development projects in the city state, the Duo in the Ophir-Rochor area and and Marina One in Marina Bay that are worth a combined S$11 billion in gross development value.

Checks by The Business Times reveal that both parties have not held talks on the matter nor is a sale of Khazanah's stake on the cards at this juncture.

"There is no such thing going on. It doesn't make sense (to do that) at this point," said a highly-placed Malaysian source.

"It would make more sense to do it (the sale) once the office asset has a stabilised yield," added the source.

Temasek declined to comment on market speculation.

A disposal by Khazanah has repeatedly gone the rounds following the Malaysian government's bid to tackle huge public debt and restructure its state-linked funds.

According to market sources, it is widely perceived that Khazanah would plan to sell its stake in the JV at "some point", but not now.

"After booking the development risk, Khazanah may want to hold out until it books the sales of residential and income stream from commercial (office space) which are only just beginning," said one market observer.

BT also understands parties have expressed interest to the M+S board in acquiring its assets as they are "prime and well rented".

M+S was the result of a historic land swap deal between Singapore and Malaysia in 2010. Three plots of former Malayan Railway land and three additional plots in Bukit Timah were exchanged for four land parcels in Marina South and two parcels in Ophir-Rochor, giving rise to the two developments.
The report by the Malaysian Reserve further speculated that Khazanah may also be in talks to sell its 50 per cent stake in Pulau Indah Ventures, another joint-venture company with Temasek.

Pulau Indah is developing integrated wellness projects in Johor's Iskandar Malaysia. The developments, Afiniti Medini and Avira Medini, have a combined gross development value of about RM3 billion (S$1 billion).

The article added that the discussions on Khazanah's sale of its stake in these JV companies follow Malaysia's new regime Pakatan Harapan's review of government-linked companies and a push for them to focus on their core businesses and deliver higher returns.

Khazanah saw a major upheaval last month following the unprecedented en masse resignation of its board to make way for a "smooth and orderly transition under the new government".

Following the clearing of the deck, Khazanah's board has been reconstructed while the state-backed fund saw a change of guard at the top with Shahril Ridza Ridzuan, who had helmed the country's Employees Provident Fund for the past five years, picked to succeed Azman Mokhtar as managing director.