KUALA LUMPUR: The privatisation of Malaysia Airports Holdings Bhd (MAHB), coupled with the extensive expertise of Global Infrastructure Partners (GIP) in airport management, is expected to unlock significant operational efficiencies and economic benefits, according to CIMB Securities.
A consortium comprising Khazanah Nasional Bhd, the Employees Provident Fund (EPF), GIP, and Abu Dhabi Investment Authority (ADIA) formally launched a conditional voluntary offer last Friday to privatise MAHB.
CIMB Securities has urged MAHB shareholders to accept the RM11 per share offer by the Khazanah-led consortium to take the company private.
The proposed acquisition values MAHB's equity at RM18.4 billion, representing a price-to-earnings ratio of 37.7x based on the airport operator's audited consolidated earnings per share for the fiscal year ended Dec 31, 2023.
The research firm believes the offer presents an opportunity for investors to realise immediate gains and benefit from the consortium's resources and vision for sustainable growth, making it a favourable proposition.
However, CIMB Securities also pointed out that Malaysia's long-haul connectivity challenges and the capital required for infrastructure upgrades could pose risks to MAHB's organic growth.
The firm said that the consortium aims to enhance Malaysia's global air connectivity and maximise the potential of its airport network, including Istanbul Sabiha Gökçen Airport.
Their key priorities include enhancing infrastructure, improving passenger experiences, attracting new airlines, ensuring safety, upgrading service standards, and increasing airport capacity.
Beyond economic advantages, CIMB Securities highlighted the consortium's commitment to delivering social and environmental value.
"They pledge to prioritise passenger and employee safety, stimulate economic growth around MAHB airports, and protect employee rights with no planned layoffs," it said.
Additionally, the consortium plans to invest in upskilling MAHB staff, improving job prospects, enhancing environmental performance, and retaining the government's special rights in MAHB.
They also guarantee stability in passenger service charges while maintaining and improving airport operations in Malaysia and Turkey.
RHB Investment Bank Bhd also recommends that investors accept the offer, as it exceeds the estimated valuation, with MAHB expected to be delisted by the first quarter of 2025.
"With the Malaysian Aviation Commission (MAVCOM) approval secured—as we anticipated—we believe MAHB is on track to get delisted with no material pushbacks expected.
"Considering the share price has been edging closer to the offer price, we believe this signals the market's confidence that this deal will likely go through," the firm said.
Transport consultant Rosli Khan has expressed a differing opinion on the privatisation of MAHB.
He cautioned that a privatised MAHB might prioritise profitability over the national interest, potentially neglecting strategic but less profitable routes essential for connectivity.
Rosli noted that the consortium could focus on short-term profits, potentially leading to underinvestment in long-term infrastructure projects crucial for driving economic growth around airports.
He also said that Khazanah and the EPF might face difficulties balancing profit-driven motives with government national interests, potentially creating conflicts in MAHB's governance and decision-making processes.
He warned that a privatised MAHB might operate with reduced transparency and public accountability, which could limit government influence over key decisions related to aviation strategy.
Even if the government retains some rights, the consortium's profit motives might lead to decisions that prioritise financial returns over national connectivity and public welfare," he told Business Times.
Rosli said that attracting new airlines requires strategic investments and partnerships.
He added that if a privatised MAHB fails to offer competitive incentives due to its focus on profit, Malaysia's ability to grow its airline base could suffer.
"Airlines also might face higher fees under private management, discouraging them from using Malaysian airports, which could negatively impact the country's air traffic growth," he said.