Singapore's Temasek buys Malaysian plantations stake

Bloomberg, Kuala Lumpur

Temasek Holdings Pte, the Singapore government's investment arm, bought a 7.5 percent interest in Malaysian Plantations Bhd., after more than a year of talks aimed at getting a stake in the banking and fund management group.

Langkah Bahagia Sdn., the largest shareholder in Malaysian Plantations, agreed to sell 178.7 million shares, a 15.37 percent stake, to Vertical Theme Sdn Bhd., Malaysian Plantations said in a statement on Monday.

Temasek owns 49 percent of Vertical, with Langkah owning the remainder.

Temasek, the biggest shareholder in DBS Group Holdings Ltd., Singapore's biggest bank, has been trying for a year to add Malaysian banking interests to financial holdings that include stakes in PT Bank Danamon, PT Bank Internasional Indonesia and ICICI Bank Ltd. of India.

Malaysian Plantations owns Alliance Bank Bhd., which offers banking, stock broking, asset management and corporate finance services.

"This is the first time the government has allowed a foreign outfit to come into a local bank in this way," said Kelvin Miranda, who manages the equivalent of US$208 million at Asian Asset Management Sdn. in Kuala Lumpur.

"This will help Alliance tremendously because it will give them access to the Singapore market and opportunities for tie-ups and cross-selling."

The sale and purchase agreement was disclosed by Malaysian Plantations in a statement to the Kuala Lumpur Stock Exchange today, and was confirmed by Temasek spokeswoman Eva Ho.

Neither party disclosed the price of the 15.37 percent stake, which is valued at 482 million ringgit ($127 million) at current share prices.

Temasek and the Government of Singapore Investment Corp. are stepping up investments in Malaysia amid a rapprochement between the two countries, which were united in a federation from 1963 to 1965.

Temasek took a 5 percent stake in Telekom Malaysia Bhd. last year, while GIC bought 5 percent of Proton Holdings Bhd., Malaysia's biggest carmaker.

Lutfiah Ismail, who owns 99 percent of Langkah, declined to comment on the sale when contacted on her mobile phone, referring calls to Malaysian Plantations Chairman Nasir Ali. Nasir didn't answer calls to his mobile phone.

Malaysian Plantations stock has risen 13 percent since Langkah secured central bank approval to sell the stake to Temasek in December.

The statement came after the 5 p.m. close in Kuala Lumpur. Malaysian Plantations fell 2 sen, or 0.7 percent, to 2.70 ringgit.

Temasek, which has more than half of its S$90 billion (US$54 billion) of assets in Singapore, is expanding overseas because it wants two-thirds of its investments to be in other Asia countries and members of the Organization for Economic Cooperation and Development.