Khazanah, EPF are weighing taking Malaysia Airports private, sources say

Malaysia Airports Holdings Bhd. is set to be privatized as its two biggest shareholders team up with buyout firm Global Infrastructure Partners and the Abu Dhabi Investment Authority to make a takeover offer for the airport operator.

Malaysia’s sovereign wealth fund Khazanah Nasional Bhd., Employees Provident Fund, GIP and ADIA offered to pay 11 ringgit per share to acquire 67% of the company, according to a Bursa Malaysia filing on Wednesday. That represents a 15% premium to the company’s prevailing three-month volume-weighted average price — a measure of a stock’s valuation — and values Malaysia Airports at 18.4 billion ringgit ($3.9 billion).

“MAHB’s airport network serves some of the world’s fastest growing aviation markets, which are benefiting from regional economic growth, increased air travel affordability and shifts in consumer spending,” Khadem Alremeithi, executive director of the infrastructure department at ADIA, Abu Dhabi’s sovereign wealth fund, said in a joint statement by the consortium.

The announcement confirms a Bloomberg News report earlier Wednesday that Khazanah and EPF were weighing taking Malaysia Airports private. 

Khazanah and EPF, the nation’s biggest pension fund, will raise their stakes in the airport operator to 40% and 30%, respectively, after the planned takeover, according to the statement. New York-based GIP and ADIA will hold the remaining 30%, it said.

Khazanah is Malaysia Airports’ biggest shareholder, with a stake of about 33%, while EPF holds an almost 8% interest, according to data compiled by Bloomberg.

The consortium said it seeks to position Malaysia Airports toward “long-term sustainable growth,” by upgrading airport infrastructure, enhancing service levels and improving airline connectivity.

“These objectives will be best achieved by MAHB as a private entity, taking a long-term approach to decision-making and capital investment and benefitting from international technical expertise,” the group of investors said in the statement.

Malaysia Airports’ shares dropped as much as 2.9% when trading resumed on Thursday, following Wednesday’s trading halt. The stock was 2.5% lower at 10.14 ringgit as of 10:11 a.m. local time.

The Subang, Malaysia-based company’s shares have risen about 38% this year. The company will be delisted from the Kuala Lumpur bourse in the fourth quarter once the takeover is complete, according to the consortium.

The Malaysian government recently extended the company’s concession and operating agreements for 39 airports until 2069, introduced service charges for airport transfers and announced the setting up of a fund to help with investments. The company also owns and operates the Istanbul Sabiha Gokcen Airport in Turkey.

Malaysia Airports is currently upgrading the Sultan Abdul Aziz Shah Airport in Selangor and is also overseeing a replacement of its suspended aerotrain services at the Kuala Lumpur International Airport.