I refer to Muhammad Syukri Razak’s “Don’t blow chance for our airports’ turnaround”. 

Gateway Development Alliance Sdn Bhd (GDA) is the consortium of three companies – Khazanah, EPF and GIP Aurea Pte Ltd (GIP Aurea) – that has made a pre-conditional voluntary offer to acquire all the shares in Malaysia Airports Holdings Berhad (MAHB) not already owned by the consortium.

GDA and GIP Aurea are joint venture (JV) companies. The latter is a JV between Global Infrastructure Partners (GIP) and Abu Dhabi Investment Authority (ADIA).

What is a JV?

A JV is a business arrangement or collaboration between two or more parties, where the parties agree to pool and share their expertise, experience and resources to accomplish a common business activity, goal or project.

JVs are therefore strategic alliances formed in circumstances where the parties lack the resources, capital or knowledge to enter into an intended market or industry.

JVs are the choice of businesses due to several advantages, which include but not limited to, the sharing of risks and costs, opportunity to gain access to new markets, and strategic move against competition.

There are two types of JVs: incorporated and unincorporated. Incorporated JVs involve the incorporation or formation of a new legal entity commonly referred to as a special purpose vehicle (SPV). Unincorporated JVs operate predominantly on the existing legal status of the parties to the JV and their respective duties and obligations which are set out in a principal JV agreement.

Incorporated JV

The parties to an incorporated JV contribute their respective assets and resources to the JV in exchange for ownership interest in it. An SPV may either be a company incorporated under the Companies Act 2016 or a limited liability partnership incorporated under the Limited Liability Partnership Act 2012.

The SPV is a separate legal entity from the existing legal status of the parties to the JV. As such, its legal status prevents adverse project or financial risks from being transferred to or from the parties to the joint venture. This form of protection limits the liability of the parties to the JV to their shareholding in the SPV.

Where the SPV is formed as a company under the Companies Act 2016, the shareholders of the SPV will typically execute a joint venture agreement and a shareholders agreement.

JV agreement

This is a definitive agreement between the parties to the JV. It will include the contributions, expectations, obligations, rights, and duties and responsibilities of all relevant parties to the JV.

Shareholders agreement

This will include, but is not limited to, the respective shareholding percentage of the shareholders, composition of the board of directors of the SPV, management committee, transferability of shares, voting rights and appointment of key personnel.

Given the above, and despite being told that GDA aims to leverage its collective expertise to enhance the nation’s airport infrastructure, ensuring long-term sustainable growth and improved services for passengers and airlines alike, the public may not be convinced by assurances that GIP will not have a hand in the management of Malaysia Airports Holdings Bhd when MAHB is taken over.

GIP, BlackRock and links to Israel

GIP is a top global airport operator. Bringing with it best practice airport management techniques, GIP has elevated the performances of the airports of Edinburgh, Gatwick, Sydney, and London City.

However, GIP will effectively be owned by BlackRock Inc. by the third quarter of 2024. In a press release of January 12, BlackRock and GIP jointly announced that they had entered into an agreement for BlackRock to acquire GIP for total consideration of $3 billion of cash and approximately 12 million shares of BlackRock common stock.

According to the press release, the “transaction is expected to close in the third quarter of 2024 subject to customary regulatory approvals and other closing conditions”. 

The public may not be convinced, again, if told that the agreement has yet to be completed.

It is said that BlackRock is pro-Israel. Malaysia, on the other hand, has been said to be among the most vocal supporters of the Palestinian cause.

Knowing what a JV is informs us whether GDA, a JV, is a strategic alliance or otherwise to take over MAHB. – May 28, 2024.

* Hafiz Hassan reads The Malaysian Insight.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.