Malaysia’s privatisation of airport operator with BlackRock entity faces a bumpy ride, but likely to go ahead

KUALA LUMPUR: Criticism and questions continue to dog Malaysia’s plan to privatise its national airport operator Malaysia Airports Holdings Bhd (MAHB), but analysts say there’s unlikely to be any U-turning on the move.

“This train has left the station and the time to back out is no longer an option because a formal offer has been made (on the proposed privatisation),” said a Finance Ministry official involved in the proposed transaction.

The official added that the international reputation of two of Malaysia’s largest state-controlled funds driving the deal, sovereign wealth fund Khazanah Nasional and the Employees Provident Fund, were at stake.

The involvement of the world’s largest asset manager, New York-based BlackRock Inc, in the multi-billion-dollar privatisation of the airport operator has turned the proposed transaction into a hot political potato for Prime Minister Anwar Ibrahim because of the US company’s links to Israel.

In mid-May, Khazanah and EPF announced they had formed a consortium with BlackRock-linked Global Infrastructure Partners (GIP) and the Abu Dhabi Investment Authority to take publicly listed MAHB private with an offer of RM11 (US$2.30) a share. 

BlackRock holds significant investments in Israel and was also a big investor in companies that arm the Israeli defence forces. It announced in January it would buy GIP for US$12.5 billion in an acquisition that is expected to be completed in the third quarter of this year.

Under the multi-stage corporate transaction to privatise MAHB, the four entities will form a special purpose vehicle, Gateway Development Alliance Sdn Bhd. Khazanah and EPF will have a 70 per cent interest in the consortium, with the foreign parties owning the remainder.

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