Malaysia lifts foreign restrictions on Tenaga

KUALA LUMPUR (AFP) - Malaysia has ended a 25 percent cap on foreign shareholdings in national power utility Tenaga Nasional, a move analysts said will attract more overseas funds into one of the country's largest companies.
Tenaga said it received approval from the ministry of finance on April 19 to remove the 25 percent foreign investor restriction on shareholdings.
"With the lifting of the said restriction, all foreign shareholders will be accorded the same rights, benefits, power and privileges and be subject to all liabilities, duties and obligations," it said in a bourse notice late Monday.
Tenaga's board of directors Monday agreed to convene an extraordinary general meeting (EGM) to seek shareholders' approval over the change, it said.
Tenaga said last month the combined foreign shareholdings in the company as of April 12 stood at 27.04 percent but those above the 25 percent threshold would not be entitled to vote.
TNB's president and chief executive officer Che Khalib Mohamad Noh Tuesday sought to allay fears the company would be foreign-owned in the wake of the announcement, the state Bernama news agency reported.
He said the government currently held nearly 70 percent of Tenaga through various agencies, including a nominal "golden share" which allowed it to outvote or veto other shares.
Tenaga had to make the change since the entry of foreign shareholders was restricted by the cap and the issue of voting rights, he said.
"As a consequence of that, some foreigners especially institutional investors tend to shy away from holding TNB shares," Che Khalib was quoted as saying.
"We think this is good for Malaysia as this reflects the country's willingness to allow more foreign investors into the country without imposing unnecessary controls," he added.
Analysts hailed the move, saying the cap had deterred foreign fund managers.
"This decision to scrap, rather than just raise the foreign shareholding limit, is the best possible outcome for Tenaga," said CIMB Investment Bank.
"Following this ruling, the company will be able to attract more foreign shareholders as voting rights will no longer be a sticky issue," it said.
Hwang-DBS Vickers Research said Tenaga's share price had remained relatively flat in the past three months, which it attributed to the cap and the limit on voting rights.
"We believe that the lack of voting rights for foreign shareholders may be one of the reasons TNB's share price has moved only 5.4 percent since January," it said in a note.
Che Khalib said the EGM would be held by July.
Tenaga shares closed higher in trade Tuesday on the news, adding 0.20 ringgit (0.059 cents) to 12.00

tunku : i guess it's a good move as long as the government will remain its 70% equity in Tenaga.