The Star Online: Business
The Star Online: Business |
- Research house advice to OSK shareholders: CEO's offer not attractive
- China trade outlook grim
- KKR finds success in Asia, tops rivals with US$6bil fund
| Research house advice to OSK shareholders: CEO's offer not attractive Posted: PETALING JAYA: Hong Leong Investment Bank Research (HLIB Research) has advised OSK Holdings Bhd's minority shareholders not to accept the mandatory general offer (MGO) of RM1.68 per share by chief executive officer and managing director Tan Sri Ong Leong Huat (pic). "We view the offer price as not attractive, given that it is significantly below its sum-of-parts (SOP) of RM2.45, as well as below the value of its 9.82% in RHB Capital Bhd (RHBCap), which is worth RM2.14," HLIB Research said. The research house noted that the major shareholder's decision to add to his stake in OSK Holdings "reflects his confidence in the value" of the company. "Moreover, given the intention of maintaining the listing status, we believe the MGO is more a regulatory issue rather than taking the company private. "Thus, minority shareholders should not accept the offer," HLIB Research added. On Tuesday, Ong and parties acting in concert had made an MGO to acquire all the remaining shares in OSK Holdings at RM1.68 each. The 33% MGO threshold was triggered after Ong and his wife acquired an additional 42.68 million shares in OSK Holdings yesterday through direct deals and open market purchases. Ong's recent purchases have raised his stake in OSK Holdings, held via OSK Equity Holdings Sdn Bhd, by 4.4% to 36.72% from 32.3%. The takeover has to achieve an acceptance rate of 50%, failing which the shares acquired under the MGO would be returned to shareholders. After hiving off its investment banking to RHBCap for RM2.09bil last year, OSK Holdings' most valuable asset is arguably its 9.82% stake in RHBCap. HLIB Research said the catalysts for OSK Holdings were that it was a significantly cheaper proxy to RHBCap at 38%, and the development of the land adjacent to Plaza OSK and/or REIT to unlock value as well as the potential distribution of dividends from RHBCap provided decent yields. OSK Holdings closed seven sen higher at RM1.70, its highest in three weeks. |
| Posted: BEIJING: China has warned of a "grim" outlook for trade as the world's second-largest economy surprised financial markets by reporting a fall in exports and imports when both had been expected to rise. The figures, which follow a government crackdown on the use of fake invoicing that had exaggerated exports earlier this year, are likely to raise fresh concerns about the extent of the slowdown in the economy and global demand. The June data, showing that exports fell 3.1% from a year earlier and imports dropped 0.7%, may now reflect the true trade picture, customs officials said. "China faces relatively stern challenges in trade currently," customs spokesman Zheng Yuesheng told a news briefing on the June trade figures. "Exports in the third quarter look grim." The customs agency said exporters were losing confidence in the face of weak overseas demand, rising labour costs and a strong yuan. The Australian dollar briefly fell about a third of a cent after the China data, reflecting worries about Chinese demand for Australia's commodities, such as iron ore and coal. The MSCI Asia-Pacific ex-Japan index was up 0.5% after gaining as much as 1.2% to a one-week high before the trade figures came out. The export fall was the first since January 2012. Economists had expected exports to increase 4% and imports to rise 8%. China's trade data is volatile and has been distorted by speculative capital flows across the country's border. Doubts about the accuracy of the figures had abated slightly since the customs office and top foreign exchange regulator launched a campaign in May to crack down on fake export invoices. Fake invoicing inflated China's official import and export totals by US$75bil in the first four months of 2013, local media reported on June 14, citing an internal review by China's commerce ministry. The customs data showed that exports to the United States, China's biggest export market, fell 5.4%, while exports to the European Union dropped 8.3%. "The surprisingly weak June exports show China's economy is facing increasing downward pressure on lacklustre external demand," said Li Huiyong, an economist at Shenyin & Wanguo Securities in Shanghai. "Exports are facing challenges in the second half of this year. The appreciation of the US dollar and the Chinese government's recent crackdown on speculative trade activities also put pressure on exports." China had a trade surplus of US$27.1bil in June, the customs administration said, largely in line with the US$27bil expected by economists. China's reform-minded new leaders have shown a tolerance of slower growth, although they still need to avoid widespread job losses that could threaten social stability. Economists expect data next week to show that annual growth in China for the April-June quarter slowed down to 7.5%. A continued slide in growth could test leaders' resolve to tolerate a short-term slowdown in the economy while pressing ahead with efforts to revamp the economy for the longer term. – Reuters |
| KKR finds success in Asia, tops rivals with US$6bil fund Posted: HONG KONG: A record US$6bil Asia fund announced by US private equity firm KKR & Co yesterday will be deployed at a time when an economic slowdown and emerging market sell-off has knocked the overall value of Asia-Pacific corporations to historic lows. While the market volatility should offer KKR opportunities to buy low, the record of the private equity industry in Asia shows that investing in the region is not as easy as it seems. Regulatory hurdles, cultural obstacles and wild market swings have forced global buyout firms to swallow smaller investment returns than they hoped, with the exception of a few home run deals. But KKR, a storied firm that pioneered the leveraged buyout back in 1976, has managed to find success in Asia even after arriving later than rivals. The firm has invested and exited China Modern Dairy Holdings Ltd, Singapore tech firm Unisteel, Japanese recruitment firm Intelligence, and remains invested in South Korea beer and baiju spirit maker Oriental Brewery. That success has encouraged investors to return to KKR's second Asia-focused fund in droves, despite companies across the region facing a shortage of available money amid concerns of credit tightening. "In private equity, you can make a lot of money in horrible macro environments," said Doug Coulter, head of private equity for Asia Pacific at LGT Capital, which allocates money to private equity funds. He was speaking at a Hong Kong Venture Capital Association event last month. Most private equity portfolios have a few investments that may prove to be more difficult than expected. For KKR, the stake it purchased in Chinese investment bank CICC looks to be under pressure. The bank, once China's top investment bank, has steadily lost market share since the KKR deal, hit by tough competition and a steep slowdown in Chinese stock issuance. The MSCI Asia Ex-Japan index is trading at 1.4 times book value, 25.4% below its 10-year median value, according to data from Thomson Reuters Datastream. The index's price to earnings ratio is also at historic lows. Investors who allocate money to private equity firms were quick to commit to the last round of Asia private equity funds raised in 2006 and 2007, though the patchy performance of that era has left the investors, known in the industry as limited partners, more selective. Thus the low prices on offer have not translated to an easy fund-raising climate. TPG Capital, which started raising a US$5bil fund around the same time as KKR, is still on the road raising money, and is expected to close short of its target, according to people familiar with the matter. Carlyle is also still in the process of raising a US$3.5bil fund that will be its fourth for the region, sources have previously said. – Reuters |
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