20100408 0954 Malaysia Corporate News.

The RM10.7bn bid by Gamuda for water assets in Selangor runs counter to the the spirit of the law, says Energy, Green Technology and Water Minister, Datuk Seri Peter Chin. The Water Services Industry Act 2006 aims to promote an asset-light environment in which water service companies just focus on operations and maintenance.

• Assets would be owned by Pengurusan Aset Air Bhd, a federal government body. "This is to ensure water companies in Selangor operate in an environment where they do not burden themselves with heavy capital expenditure on pipe replacement," Chin said. (BT)

The negotiations on the consolidation of Selangor’s water assets among the water concessionaires, the state and the federal government would be finalised by next week, Selangor MB Tan Sri Abdul Khalid Ibrahim said.

• He said an announcement would be made a week after the deal was finalised. Khalid maintained the stance that the issue was “still in the hands” of the federal and state governments to consider the bid for the water assets in Selangor. (Financial Daily)

Malaysia can utilise groundwater in a sustainable manner if the right policy, coupled with better management groundwater systems are implemented, an expert says. Hydrogeology Research Centre Director Dr Saim Suratman said that currently, groundwater made up only 2% of total public water usage while the rest was from surface water.

• "Many states actually have the potential for groundwater development and Kelantan is one of the states that probably has the most viable groundwater development," Saim said. (Bernama)

As the debate on takeover rule changes heats up, a corporate lawyer argues that the role of independent advisers can be boosted instead to protect small investors and help them get a higher offer price.

• Sreesanthan Eliathamby, a partner of law firm Kadir Andri & Partners, who has in the past advised on several major transactions in the country, said there are other more effective ways to achieve a better price for minority investors in a merger and acquisition (M&A) deal, rather than tightening the rules outright. 
• "For example, you can expand the role of independent financial advisers to ensure that the advice given is more granular and assist the minority in making an informed decision," Sreesanthan said. "If the price difference between what the independent adviser has recommended and the offer is more than 10%, the regulator can require that the deal cannot go through," he suggested.
• He said the Securities Commission (SC) should look into these alternatives because a tougher rule will immediately drive away potential buyers on impression that a deal is harder to be done, and yet there is no guarantee that minorities will get a higher offer once the bar is raised. (BT)

Malaysia should revive the now defunct Bumiputera Stock Exchange (BSE) so that Bumiputera-owned companies would have an avenue to raise funds for their development, suggests the former president of the local stock exchange. "The reason is this: local companies, especially Malay entrepreneurs, have got very limited avenues (to raise funds) although they've been told there are a lot. They go to banks and banks say no," Datuk Mohd Salleh Abdul Majid said.

• Malaysia first had a BSE which was formed by Mara in 1969 and became operational in 1971, to encourage Bumiputeras to make stock market investments and help Bumiputera companies tap investment capital. The exchange however failed and was dissolved in 1989 after 20 years as it faced many challenges, including lack of trading activity. 
• "Unfortunately, it did not have a system ... so if you wanted to sell, you'd have to wait for 3 or 4 months before a buyer could be found. But (now), we want to introduce a system, new trading rules and supervision by the proper authorities," Mohd Salleh said.
• Mohd Salleh said with the new BSE, companies going for a listing should be subjected to different rules than that of the current stock exchange. For instance, it shouldn't matter what a company's paid-up capital is, as long as it has a sponsor of strong standing to back it up. Sponsors could be statutory bodies, government agencies, banks or even strong listed companies, he said.
• As for shareholding, he said perhaps a certain percentage could be allocated to non- Bumiputras, or, the shares could be open to anybody as long as it belonged to a Bumiputra. People should also be able to trade the shares over the Internet, he added. (BT)

Logistics company, Nationwide Express Courier Service, may bid for a stake in Pos Malaysia. "Whichever company that goes in will definitely change the landscape of the industry. Obviously, it depends from which industry the investor is from, and as a major player in the (logistics industry) we want to be a part of that. If there is any synergy whichever way around, we are open to discussions,” chairman Rozilawati Basir said. She declined to comment whether the company was in talks with Khazanah. (BT)

Affin Bank relaunched its latest financial product, Affin Smartmoney, with enhanced features and a competitive interest rate. Affin Smartmoney allows customers with a minimum fixed deposit (FD) account of RM10,000 to open an equivalent overdraft facility (OD) of up to 100% of their FD. The facility helps customers to maintain interest rates on their FDs while paying minimum sum for the overdraft,” said Affin Bank director for consumer banking Idris Abd Hamid. (BT)

AmInvestment Bank's fund management division expects to grow assets under management to RM28bn by year-end, through the promotion of new funds, existing ones and by securing new mandates from institutional investors. The company currently manages some RM20bn.

• "We are increasingly more active in the region, not only in Malaysia and the Middle East, and we will build upon that direction," funds management division CEO Datin Maznah Mahbob said. The bank's fund management division plans to launch another 10 funds this year. (BT)

Deutsche Bank officially launched the Islamic Securities Services (SS-i) on Wednesday, the first Shari'ah-compliant product of its kind in Malaysia. The SS-i also complements DBMB's suite of Islamic Banking products. Its Head of Global Transaction Banking, Ridzal Sheriff said the product is targeted at both domestic and foreign Islamic fund providers.

• "It facilitates DBMB's clients in achieving Shari'ah-compliance in their operational and day-to-day activities while ensuring Shari'ah transparency to their end investors," he said. (Bernama)

DiGi has appointed Henrik Clausen as CEO following the resignation of Johan Dennelind, who will leave the company on May 17. It remains unclear, however, why Dennelind is leaving or where he is going to, after having been with DiGi for six years. He took over as CEO in Apr 2008.

• "After six very rewarding years, leaving DiGi and Malaysia will naturally be difficult for my family and I, but the timing is right for me to move on to new challenges," he said. Clausen has served as Telenor Denmark CEO for the last five years. (Financial Daily)

Domestic long and flat steel products will see substantial price increase at least for the next three months following an imminent shift in the annual iron ore contract to quarterly pricing by the world's top three iron ore mining companies.

• The cost of iron ore to Asian steelmakers could now rise 80-100% or US$110-120 per tonne, under the new pricing mechanism said industry players. Malaysian Iron and Steel Industry Federation (Misif) president Chow Chong Long said that there was a huge potential for local steel bar prices to trade above the current RM2,300-2,400 per tonne level. 
• "Local steel millers, like their international counterparts, will be affected by the shorter term iron ore contracts. There is no choice but to pass the higher iron ore cost to our customers," he added.
• Chow said steel demand was also expected to accelerate in the coming months with rising orders from the Asean region, structurally weak US$ and resurgence in domestic steel consumption. (Starbiz)

KNM announced that the Ministry of Finance on 6 Apr approved a total tax incentive of RM1.4bn to be granted and applied over four years with effect from 2009 in respect of the Borsig acquisition. (BMSB)

Danajamin Nasional, a state-owned financial guarantee institution, will announce by month-end its commitment to guarantee an additional RM1.15bn worth of bonds issued by five companies from the oil and gas, infrastructure, property, construction and plantation sectors.

• This is part of its target to guarantee RM3bn worth of bonds this year. Last year, the issuance of private debt securities (PDS) by the Malaysian corporate sector stood at RM36bn. 
• Since its set-up in May last year as part of the RM60bn stimulus package, Danajamin has entered into an agreement with Kencana Petroleum to guarantee the latter's RM250 million Islamic bond, or sukuk, issuance. (BT)

BMW Malaysia expects sales of its X-series model this year to increase by 20% compared with 15% last year. MD, Geoffrey Briscoe, said encouraging sales would continue to be driven by its existing and the new BMW X1 sports activity vehicle (SAV). Currently, the BMW X1 is available in the form of the diesel-powered BMW X1 xDrive20d with a price tag of RM299,800, while the petrol-driven BMW X1 sDrive 18i, which would be available by Jun-10, is priced at RM263,800. (Bernama)

Sunway City has proposed to sell all its stake in eight properties to a REIT for a price that has yet to be fixed. The properties are Sunway Pyramid shopping mall, Sunway Resort Hotel & Spa, Pyramid Tower hotel, Menara Sunway, Sunway Carnival mall, Sunway Hotel Seberang Jaya, SunCity Ipoh hypermarket and Sunway Tower.

• It also plans to sell three pieces of leasehold land in Selangor to Sunway Pyramid Sdn Bhd (SPSB). SunCity also signed letter of intents to buy 48% of SPSB and Sunway Resort Hotel Sdn Bhd. (BT)

Dijaya Corp will jointly develop a mixed property project worth US$174m (RM560m) in Mongolia following the acquisition of a 75% stake in Transglobal Ltd for US$50,000. The overall development will be undertaken in three phases and would include apartments and one shopping podium. Dijaya expects the acquisition of Transglobal to be completed by Jun-10 while funding for the project may be sourced internally and from bank borrowings. (Malaysian Reserve)

Dayang Enterprise has won a RM400m maintenance contract from Sarawak Shell. The contract is for five years initially, with a one-year renewal option. (BMSB)

Prudential Assurance Malaysia has appointed Lai Leong Pin as its general manager. Prudential CEO Charlie Oropeza said Lai’s appointment underlined the importance of the agency distribution channel to the continued growth and success of the company. Prior to his appointment, Lai was the company’s chief agency officer. (BT)