TENGKU Zafrul Abdul Aziz has defended BlackRock’s investment in Malaysia Airports Holdings Bhd (MAHB), urging Malaysian to consider the issue holistically.

Prime Minister Anwar Ibrahim has dismissed as “baseless” the allegation that MAHB will fall into the hands of a “pro-Zionist” company.

The issue is the pre-conditional voluntary offer from Gateway Development Alliance and its shareholders to acquire all shares in MAHB not held by the consortium.

From the perspective of Khazanah Nasional Bhd and EPF, the privatisation will benefit not just MAHB but also the nation.

Khazanah has spoken of the need to boost connectivity, inbound tourism, and more long-haul flights. 

The rationale was to align strategy and work closely with the government.

When asked why Malaysian companies were not considered, the response was that there was a need for an international technical partner with the expertise and drive to implement international best practices.

On why Global Infrastructure Partners (GIP) was chosen and the role of the Abu Dhabi Investment Authority (Adia) in the investment, Khazanah said the two entities had much to bring to the table. It said GIP wouldn’t be directly appointing staff or secondees to manage MAHB.

But isn’t connectivity and long-haul flights things for the national carrier and the Tourism Ministry, and not the airport operator, to worry about?

The rationale lacks transparency and good governance.

It is a criticism of the MAHB board and management to say GIP has the expertise and the drive to get things right up to standard. How then did MAHB get the Turkey job? 

What are GIP and Adia bringing to the table? In 2023, the three airports operated by GIP logged around 94 million people, while the MAHB network served 119.4 million, bringing in RM543 million in profits. Sydney Airport posted a net loss of almost US$600 million.

On appointing or seconding staff, there is a “shareholders agreement” which details, among others, board composition and key management positions. Hopefully, this will be made transparent.

Frankly, this is an attractive investment for GIP considering the stability of of MAHB’s infrastructural assets that generate a consistent cash flow and the expected continued growth of traveller traffic in its airports.

MAHB has also made significant investments to replace ageing assets and modernise the airports.

GIP and Adia would not wish to invest in MAHB if there isn’t a potential for good returns.

Funding should not be a problem as in 2023, MAHB made a net profit of RM543 million with a cash balance of RM2.35 billion and a net gearing ratio of 0.28 times. In a 2019 report, Mavcom found that airport developments face funding constraints that led to deterioration of airport services.

Another point to note is whether the offer price is reasonable, especially with the Enterprise Value/Ebitda multiple and MAHB’s possession of a 2,731ha land bank.

What about the moral aspects of the deal and whether it is consistent with the government’s stance on Gaza? BlackRock having an interest in Bursa Malaysia stocks and bonds has already been on the plate for some time.

This is not a question of international investors having confidence in our country.

The government must sit down with Khazanah to carefully consider every aspect of the deal.

What say you? – June 6, 2024.

• Saleh Mohammed reads The Malaysian Insight.