Is the AIRPORT giveaway price too low?

According to a Bloomberg report, Northcape Capital Private Limited believes that the proposed purchase price proposed by the major shareholder planning to privatize the airport may be opposed by shareholders due to lower valuations.

Northcape Capital holds 1.7% of the airport's shares, and its fund manager Ross Cameron indicated that the acquirer might need to revise the offer.

“This purchase offer is opportunistic, and stakeholders may face the risk of not being able to reach the 90% threshold required for the company to go public. ”

On the 15th of this month, a consortium formed by Khazanah (Khazanah), the majority shareholder, announced that it would sell the remaining shares in the airport at a price of RM11 per share. The offer was proposed at a time when revised franchise terms and extended operating agreements provided airport operators with better profit prospects.

According to information, members of the consortium also include the Employee Provident Fund Authority, the US Global Infrastructure Partnership (GIP), and the Abu Dhabi Investment Authority (ADIA).

However, after the self-purchase proposal was released, Malaysia Airport's stock price did not rise but fell. Compared with the closing price last Tuesday (14th), it is now down about 3%.

On the other side, many analysts recommend that investors accept offers.

Macquarie Capital Securities analyst Guo Max (transliteration) said that considering the airport's stock price, which has risen over the past six months due to the “advance layout” of a small number of shareholders, the valuation of this deal is quite reasonable.

Still, some might choose to keep waiting to get a better price.

According to the report, referring to recent infrastructure asset transactions involving the region, such as the Sydney Airport divestment case worth 17 billion Australian dollars (about RM53.08 billion) in 2021, it was completed after two proposals were rejected.

Singapore SGMC Capital Fund Manager Mohit Mirpuri believes that the deal will eventually come true, but it may take longer than they expected.