Delisting of PLUS from Bursa Malaysia to benefit others?
Delisting of PLUS will return RM9.1bn cash to minority shareholders after 14 December 2011. How this cash is reinvested will depend on the investment mandate of the shareholders. Potential beneficiaries are counters like Maybank, Maxis, Telekom, Petronas Chemicals, RHB Capital, MISC, Public Bank, Digi, YTL Power, KLK, BAT, Petronas Dagangan, Petronas Gas, LITRAK, Air Asia, Bumi Armada and UEM Land.
Delisting of PLUS to return RM9.1bn cash
- Trading in PLUS has been suspended and shareholders as at 14 December 2011 will be entitled to receive RM4.45 cash per PLUS share. This represents the privatization offer by EPF, UEM and Khazanah who collectively own 59% of PLUS.
- The minority shareholders of PLUS will thus receive RM9.1bn cash (41% of 5bn shares at RM4.45 per share) on 28 December 2011, which may be reinvested in Bursa Malaysia.
Which counters may benefit from the reinvestment of this cash?
- For institutional fund managers, what they do with the cash proceeds will depend on the investment mandate of their funds which originally owned PLUS.
- If the mandate was for dividend yield, then stocks of decent size (>RM10bn market capitalization) and dividend yield similar or better than PLUS would be the likes of Maybank (MAY MK, Hold, TP: RM8.00), Maxis, Telekom Malaysia, Petronas Chemicals, RHB Capital, MISC, Public Bank, Digi.Com, YTL Power, Kuala Lumpur Kepong (KLK MK, Hold, TP: RM21.75), British American Tobacco, Petronas Dagangan and Petronas Gas.
- If the mandate was for concessionaire-type businesses, then similar stocks would be YTL Power and LITRAK.
- If the purpose for holding PLUS was to benchmark against the FBMKLCI, then Air Asia, Bumi Armada and UEM Land were the three stocks that replaced PLUS, MISC and Gamuda in the FBMKLCI. However, the combined market capitalization of the new inclusions (Air Asia, Bumi Armada, UEM Land) amounts to only RM32bn compared to RM54bn for the three that were removed (PLUS, MISC, Gamuda). Hence, there will also be some redistribution to other FBMKLCI components to maintain a benchmark against the FBMKLCI.