MAHB Privatisation: Taking Away the Frustration or Creating More?

The recent developments surrounding Malaysia Airports Holdings Berhad (MAHB) and its impending privatisation raise critical questions about governance, accountability, and the interests of stakeholders. While the Transport Minister may feel relieved that MAHB can now move faster in responding to industry demands, the broader implications of this move deserve closer scrutiny.

This privatisation, spearheaded by Khazanah Nasional Bhd and its consortium partners, seems all but certain, with the acceptance threshold lowered to 85% and the deadline extended. The offer price remains at RM11 per share, and once completed, MAHB will be delisted, potentially forcing index funds to accept the offer. But is this the best outcome for Malaysia?

Key Concerns and Unanswered Questions

1. The Role of the Securities Commission (SC)

The SC is entrusted with ensuring investor protection and maintaining market integrity under the Capital Markets and Services Act 2007 (CMSA). Given the scale of this transaction, is there sufficient oversight to ensure transparency and fairness for all investors, particularly minority shareholders?

2. Takeover Rules and Conditionality Adjustments

The Rules on Take-overs, Mergers, and Compulsory Acquisitions should be reviewed to prevent last-minute changes in conditionality, such as revising acceptance thresholds. The ability of a consortium to adjust these terms mid-way raises concerns about fair play in corporate takeovers.

3. Minority Shareholder Protection

Once MAHB is delisted, shareholders who have not accepted the offer will hold unlisted shares with significantly reduced liquidity. How does this align with investor protection principles? Should there be stronger safeguards in place?

4. Alignment of Stakeholders and Government Policies

MAVCOM’s role in balancing the interests of shareholders, government policies, and various ministries is crucial. Have these competing objectives been addressed adequately in the privatisation process?

5. Ensuring International Best Practices

One of the key justifications for privatisation is to apply international best practices. But who will ensure these standards are maintained post-privatisation? Will there be independent monitoring mechanisms?

6. The Independent Directors’ Concerns

Previously, five independent directors advised against this deal due to MAHB’s strong financial performance and growth trajectory. They warned that delisting would reduce transparency and accountability. Have they changed their stance, and if so, why?

7. Raising Private Capital for Expansion

Privatisation is often justified as a means to raise private capital. However, Khazanah and EPF will still hold 70%—meaning much of the funding will still come from Malaysian public funds. With an estimated RM15 billion needed for airport upgrades over the next decade, how much will private shareholders contribute?

8. Fair Valuation of MAHB Shares

Hong Leong Investment Bank valued MAHB shares between RM12.61 to RM13.71, yet the offer price remains at RM11.00, deemed unfair by the independent adviser. Why is Khazanah willing to settle for this lower valuation?

9. Justification for Privatisation

The consortium argues that MAHB’s operational and financial underperformance justifies privatisation. But what benchmarks are being used? How does MAHB compare to other airports managed by Global Infrastructure Partners (GIP)?

10. The Board’s Responsibility

The Transport Minister’s frustration with MAHB’s inefficiencies may have been directed at the previous board, as the current members are relatively new. Will they have the autonomy to make independent, technically sound decisions? What happens if they oppose certain aspects of the privatisation?

11. Frequent CEO Changes

MAHB has had five CEOs in the past 10 years. Does this indicate a deeper governance issue? Who has been making these appointments, and how does this affect MAHB’s stability and long-term strategy?

12. Malaysia Airlines’ Role

Khazanah also owns Malaysia Airlines Berhad (MAB). Strong national carriers are crucial to major airport hubs worldwide. How does this privatisation align with MAB’s future and Malaysia’s aviation ecosystem?

13. Open Sky Policy

Is the government willing to adopt an open sky policy to increase airline competition and passenger growth? If so, how does this fit into MAHB’s privatisation plan?

14. Minority Shareholders’ Voice

The Minority Shareholders Watch Group (MSWG) should weigh in on corporate governance matters. Does this privatisation align with good governance principles?

15. Competition and Market Structure

The Malaysia Competition Commission (MyCC) should assess the long-term impact of this move on the aviation sector. Infrastructure alone does not determine MAHB’s success—competition, policy direction, and airline partnerships are equally vital.

An Alternative Approach: Management Contracts

One major question remains: Why full privatisation? Couldn’t the consortium achieve its ambitions through a management contract instead of an outright takeover? A well-structured management contract could enhance efficiency while preserving public interest and regulatory oversight.

Where Does the Buck Stop?

Moving forward, transparency, accountability, and clear lines of responsibility must be established. The Transport Minister may walk away satisfied, but will Malaysians—particularly investors and industry stakeholders—benefit in the long run?

Privatisation should not be about short-term financial gains for new shareholders at the expense of long-term national interests. It must be strategic, well-regulated, and aligned with Malaysia’s broader economic and aviation goals