EPF To Buy PLUS Expressways?

Is this a scoop? THis was reported in an exciting newish blog named Taikuns & Taikors. It now looks like sensibility has won the day with EPF entering the fray to buy PLUS Expressways. I can so no better solution to that. This toll system is too ingrained to be in private hands. At least now, all profits will accrue to EPF holders.

http://www.tnt.net.my/home

Some twelve million EPF members are in for a windfall as the huge profit stream from Plus will directly boost yearly interest payout to exceed the current average of five percent, though earlier MMC Corp and Asas Serba proposals to buyout Plus are rejected.

The government has given the nod for the Employees Provided Fund to acquire Malaysia's largest tolled highway operator, Plus Expressways Bhd, putting an end to the attempts of two private companies to take over the Khazanah-owned entity.

EPF’s late-entry acquisition pips the proposals made separately by Tan Sri Syed Mokhtar Al-Bukhary’s MMC Corporation Bhd and Tan Sri Halim Saad’s Asas Serba Sdn Bhd to buyout Plus through Khazanah Nasional Bhd, which directly owns 16.74% of Plus and has an indirect stake of 38.51% via UEM Group.

Raising the roughly RM11 to RM12 billion to pay for the 55% of Plus shares now in Khazanah’s hands is considered as “loose change” as EPF has RM402 billion in total asset allocation as at March this year and would not require the pension fund to resort to the debt market.

Plus Expressways Bhd announced a traffic volume of 1,281.4 million Passenger Car Unit kilometer (PCU-km) in July, up four per cent compared with the same period last year.

PLUS manages the North-South Expressway, New Klang Valley Expressway, Federal Highway Route Two and Seremban-Port Dickson Highway.

For the seven-month period ended July 30, traffic increased nine per cent to 9,916.7 million PCU-km from the previous corresponding period.

Meanwhile, its ELITE (North-South Expressway Central Link) subsidiary recorded 137.8 million PCU-km in July, an increase of 10.1 per cent from the corresponding period.

Year to date, traffic rose 13.6 per cent to 911.4 million PCU-KM against the the same period last year.

Read more: Plus Expressways posts 4pc traffic growth http://www.btimes.com.my/Current_News/BTIMES/articles/20100830182238/Article/index_html#ixzz10Sw1D41v

The shifting of a large chunk of a government controlled asset from one institution to another, is seen as the end of strategic assets being placed in the hands of individuals and ushering a new era of compliance on public accountability.

At a stroke, some 12.7 million EPF members will enjoy a windfall, as analysts compute the added cash flow from Plus to EPF will see its members gaining an extra one or two percent in annual interest payout from the present average of 5 percent.

In recent weeks there has been an unprecedented surge in the share price of Plus, touching its all-time high recently of RM4.32 on September 1 from its 52 week low of RM3.20.

Commenting on the government’s move to shift a strategic asset from one institution to another as it matures, in this case transferring Plus from Khazanah to EPF, a senior local banker said, ”It really is a way of sharing corporate profits directly with the public so people can gain from well run business operations within the government stable.”

A stock analyst familiar with the deal adds that the government has taken a lot of brickbats in the past for awarding contracts to individuals and this move marks the end of an era of placing strategic assets in the hands of individuals.

“Almost all the past corporate debacles stemmed from individuals being trusted to manage national assets or assets of strategic importance. However, a mix of over-gearing and perhaps, over-ambition, led to their eventual failure which saw the government being forced to bail them out.

“In fact, Plus was once under the Renong Group and Khazanah was asked to take it over, rehabilitate the company and put in place a strict code of corporate governance.

Plus today is a really top-notch operation that is rated one of the world’s top five tolled highway operators.

“From Putrajaya’s viewpoint, it makes sense to transfer Plus to another state institution that pays out dividends directly to millions of Malaysians. We have to see this as a signal from the present administration that they are using a fresh approach to pass on profits generated by state-controlled companies to the man-in-the-street.

At the same time, the old practice of awarding large-scale state assets to individuals has come to an end,” he said.

The Plus purchase caps an acquisition spree by EPF which saw it take control of property developer MRCB and bank holding company RHB Capital, as a means of controlling large-scale profit generators to pay out a steady dividend pipeline to its members.

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Need A Few More Great CEOs For GLCs

What's the difference between a good CEO and a great one? In Malaysia there are not many great CEOs for sure. Many of our top companies are still family controlled companies, and generally its very rare to get family members that are also great CEOs. Family owned enterprises are usually started by a great entrepreneur but as you mushroom into a listed company, many have problems in letting go. An entrepreneur may be able to build a business from scratch to earning RM50m profit a year, but as you expand and scale up, you need a professional person with the vision and execution ability to bring the company to the next level. Ask many CEOs, they don't even talk about what is the next level.



If you put it to a vote, Nazir Razak should probably come in as the best CEO Malaysia has seen for the past 20 years. All you have to do is to track where Bumiputra Commerce Bank was at 10 years ago. If you put that side by side with Maybank, Affin, heck even Public Bank ... the trajectory and the path taken was so different.

Its just a coincidence that CIMB is now a Khazanah owned company. Even with the recent GLC transformation programme, we still see a dire lacking in the top honchos when compared to Nazir.

Let's cut to the chase, what makes a great CEO?

1. Integrity: Always do the right thing regardless of sentiment and never compromise your core values. If you cannot build trust and engender confidence with your stakeholders you cannot succeed. No amount of talent can overcome illegal, immoral or otherwise ill-advised actions.

2. Courage / Excellent Decision Making Skills / Decisiveness: As a CEO you will live or die by the quality of the decisions you make. These decisions are like the ship's mast, every bit that you do steers the ship in a certain direction. He/she must also know when to back down and be able to accept it when he realises its a mistake.

3. Ability to Focus: If you cannot focus you cannot perform at the level necessary to remain in the C-suite for very long. The ability to do nothing more than understand, and lock-onto priorities will place you in the top 10% of all executives.

4. Leveraging Experience: Inexperience, a lack of maturity, needing to be the center of attention, not recognizing limitations, a lack of judgment, an inferior knowledge base, or any number of other common mistakes made by rookie CEOs can cause your house of cards to fall. If you don’t have the experience personally, hire it, contract it, but by all means acquire it. Great CEOs surround themselves with tier-one talent and the best advisors money can buy. They don’t make uniformed or ill-advised decisions in a vacuum.

5. Command Presence: Great CEOs possess a strong presence and bearing. They are unflappable individuals that never let you see them sweat (unless of course it serves a purpose). Everything from how they carry themselves to how they speak and dress messages that they are in charge.

6. Embracing Change: Great CEOs have a strong bias to action. They don’t rest upon past accomplishments and are always seeking to improve through change and innovation. In today’s fast paced and competitive environment those CEOs who don’t openly embrace change will often be shown the door prior to the expiration of their initial employment contract.

7. Brand Champions: Great CEOs understand branding at every level. They seek to build not only a dominant corporate brand, but also a strong personal brand. CEOs that are not well branded on a personal basis, or who let their corporate brand fall into decline will not survive.

8. Resourcefulness / Boundless Energy: Great CEOs have a boundless amount of energy. They are positive in their outlook, and their attitude is contagious. A low energy CEO is not motivating, convincing or credible.

9. Business Acumen: Great CEOs have a deep understanding of the business and a strong orientation toward profit. Great CEOs possess what often appears to be a sixth sense or an almost instinctive feel for what the company needs to do to make money and remain competitive.

10. People Acumen: Great CEOs have a nose for talent…They understand how to recruit, develop and deploy talent while focusing on applying the best talent to the best opportunities. They also know when it’s time to make changes and cut losses as needed.

11. Organizational Acumen: Great CEOs know how to engender trust, know when and how to share information, and are expert listeners. They develop strong and positive corporate cultures driven to performance by aligned motivations. They can quickly diagnose whether the organization is performing at full potential, delivering on commitments, and whether the company is changing and growing versus just operating.

12. Curiosity: Great CEOs possess a powerful motivation to increase their knowledge base and to convert their learning into actionable initiatives. They question, challenge, confront and are never accepting of the status quo.

13. Intellectual Capacity: Great CEOs are also great thinkers both at the strategic and tactical level. They are quick on their feet and know how to get to the root of an issue faster than anyone else.

14. Global Mindset: Regardless of the geographical boundaries of the current business model great CEOs think globally. Limited thinking results in limited results. Whether global thinking is applied to capital formation, supply-chain issues, business development, strategic partnering, distribution, or any number of other areas, those CEOs who don’t grasp the importance of thinking globally will not endure. Great CEOs are externally oriented, hungry for knowledge of the world and adept at connecting developments and spotting patterns.

15. Never Quit: Great CEOs refuse to lose…They have an insatiable appetite for accomplishment and results and while they may reengineer or change direction they will never lose sight of the end game.

16. Execution: The decisions and strategy of a CEO will only be as effective if they have the implementation and monitoring skills to execute ideas and follow through. The great CEOs will only recruit managers that has proven themselves time and again in seeing through a project or transmitting a vision into reality effectively.

17. Not Staying Still: Too many CEOs end up just managing their companies in the same pond. Great CEOs will always be aware of the need to move up to the next level. Always be concerned about your business model and platform of activities, building initiatives or recruiting talent to scale up the business.

18. Fair: Too many CEOs are just intent on finding ways to reward themselves. A great CEO will devise ways to reward performers in a big way. Loyalty can only go so far. To build great companies, you need a core team that is well rewarded to see through the long term vision, and be paid well in the process. You cannot build value into the company when talent keeps going out the door - there has to be continuity.

19: Empowering / A Strong BoD: You need to have a fair and strong board of directors and not staffed by cronies. You can have a great CEO but he/she will not be effective if the BoD gets in the way. The BoD is there to oversee not micro manage. Just as a great CEO will be able to empower talented employees to achieve greater heights, so too the BoD must empower the CEO to do his/her job.

20. Foresight: Great CEOs are prepared to create their own luck by cultivating an ability to see opportunities for their company and to make the deals that convert those opportunities into realities. Some things that may seem like amazing foresight are actually the result of the hard work and discipline it takes to constantly look forward to build a successful company. Great CEOs must also constantly develop new products to build and retain a customer base. Foresight is also the ability to hire and retain the right people, looking ahead toward the growth of the company.

Nazir scores brilliantly in almost every category (no, I am not putting myself up for a job at CIMB). If only we have another 4 Nazir Razaks to turn things around faster. Food for thought. If we have another 4 Nazirs, what would he be doing at these 5 GLCs??? I would exclude him from some GLCs because there might be very little he can do there, such as Tenaga or Malaysia Airports. I also would not put him at Maybank as the stegosaurus will take too long and too much work to turn around. I will select the 4 GLCs that I think will benefit the most:

1) UEM World / Iskandar - I think the Nusajaya project started way before the two Singapore IRs. The bloody casinos are up and running and where are we??? Oops, forget about the Middle East partners now, let's look to China and India. Execution, execution, timeline, goalposts, rollout scheduling, ... for every project delays there will be 1,001 excuses, and therein lies our problem, we are always ready with excuses. I think Nusajaya is a brilliant concept, but seriously, I hope its not taking another 10 years to rollout, by that time I think Indonesia may have transformed Batam into another Nusajaya already with a bridge linking up both islands.

2) Proton - It will be a short stay for Nazir at Proton. Just sell the thing to another major car maker that can carry the platform we have and leverage on it. We take a minority stake say 30% and just let the thing run by someone else that have the regional or global marketing, design, distribution and cost efficiencies to run this thing. Close shop.

3) PLUS - As it is, PLUS is already Asia's largest listed expressway owner and toll operator, easily beating out the two listed Chinese firms in HK. Its an under leveraged vehicle. Nazir will come in, start up a "financing unit" within the firm to tap bonds and capital to buy, invest, build new tollways all across Asia. Its all a matter of "funding the thing" properly. Nazir will keep enlarging the portfolio by hiving off profitable tollways into REIT like instruments to free up capital. PLUS will be 3 times the size of what it is now within 3 years. Macquarie Infra here we come.

4) Sime Darby - Nazir will do wonders here. Just break off the plantation unit and rethink the business model. Why are we just in palm oil??? Sell huge plots of land to Sime Property and hive that off as an independent unit as well - I am sure Nazir will buy IJM Land and SP Setia and roll them all into a proper behemoth with a lot of claws and market edge.



p/s photos: Ririn Dwi Aryanti

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