Malaysia Armed Forces Fund weighs taking Boustead private

(May 27): Malaysia’s Armed Forces pension fund is weighing options for its controlling stake in Boustead Holdings Bhd, including taking the conglomerate private, people with knowledge of the matter said.

Lembaga Tabung Angkatan Tentera, which holds a 59% stake in Boustead, has received approval for a loan to finance the deal, one of the people said. Shares in Boustead, an investment group whose interests span real estate, financial services, plantations and manufacturing, are down nearly 38% in the year to date, giving it a market value of about US$275 million.

The potential privatization of Boustead comes as LTAT attempts to restructure itself amid performance challenges that predate the coronavirus crisis. LTAT is working with advisers on the restructuring, the people said.

Discussions are still in the early stages and LTAT could still decide not to proceed with the sale, the people said. Representatives from Boustead and LTAT did not immediately respond to requests for comment.

The fund was set up in 1972 to provide retirement and other benefits to members of Malaysia’s military. Under the superannuation plan, members are required to contribute 10% of their monthly salary while the Government contributes 15%, according to its website.

LTAT has roughly RM9.5 billion (US$2.2 billion) in assets under management, according to a report by State news agency Bernama on its 2019 financial results.

Among the Armed Forces fund’s largest holdings are its stake in Boustead and a 35% stake in Affin Bank Bhd., according to data compiled by Bloomberg. 2019 was a difficult year for the fund due to neither company paying a dividend, the company told Bernama.