From Mazli Noor

The proposed RM11 billion takeover of IJM Corporation Berhad by Sunway Berhad represents one of the most significant corporate transactions in recent Malaysian history.

With government-linked investment companies (GLICs) collectively holding 43.88% of IJM shares – Employees Provident Fund (EPF) with 20.41%, Retirement Fund Inc (KWAP, 9.63%), PNB-ASN (12.93%), and Yayasan Pelaburan Bumiputra (0.91%) – the decision before our sovereign wealth funds carries profound implications for millions of contributors and investors.

There are serious concerns, however, that warrant more thorough public scrutiny.

The question of value and returns

Upon the examination of the financial mechanics of this transaction, significant questions emerge about value preservation for beneficiaries.

Consider EPF’s position, with its shareholding diluted from 20.41% in IJM to approximately 7.3% in the enlarged Sunway entity. While Sunway’s market capitalisation would grow from RM38 billion to around RM50 billion, the accretive effect on earnings would actually be modest, i.e. roughly 1%.

More importantly, we must consider dividend implications. IJM has a strong dividend track record, with EPF receiving on average RM50 million per annum over the last six years. By comparison, EPF’s current 9.54% stake in Sunway yields approximately RM38 million. This will decline further after the acquisition, with its shareholding thereafter reduced to 7.3%.

These represent real returns to pensioners and everyday Malaysians who depend on these institutions to safeguard their futures.

Hence, we must ask: does this transaction genuinely enhance value for beneficiaries, or does it prioritise other interests?

The strategic asset question

Beyond immediate financial returns, there is a broader strategic dimension that deserves attention.

IJM currently owns critical national infrastructure assets – highways and ports – that are both strategically valuable and increasingly scarce. These mature, cash-generating assets have provided reliable returns to investors for years.

While GLICs would remain significant shareholders in the enlarged entity, their influence would be materially diluted.

This raises an important question: should our sovereign wealth funds be relinquishing control of strategic national assets that have proven their value over time?

The reality is that in Malaysia’s current markets, acquiring comparable infrastructure assets is and will continue to be extraordinarily difficult.

EPF already controls significant highway assets through PLUS Malaysia Berhad, while port assets are concentrated in MMC Port Holdings and Westports Holdings. Once these strategic holdings are diluted, replacing them becomes exceedingly challenging.

A call for transparency

We must be clear: this is not about opposing corporate consolidation or genuine market activity. It is imperative that Malaysian businesses remain dynamic and competitive.

However, when a transaction of this magnitude involves the retirement savings of millions of Malaysians, we have a responsibility to ensure that it undergoes the most rigorous scrutiny.

Does this particular transaction structure adequately protect GLIC beneficiaries? The mathematics of dilution, dividend implications, and strategic asset considerations all point toward the need for careful re-evaluation.

Accountability to beneficiaries

GLICs are stewards of public trust. EPF manages the retirement savings of over 15 million Malaysians. KWAP safeguards civil servant pensions. PNB serves bumiputera investors. These institutions exist to maximise sustainable, long-term returns for their beneficiaries.

The professional management of our GLICs will no doubt evaluate this proposal with the seriousness it deserves. However, given the magnitude of this transaction and its implications for ordinary Malaysians, public dialogue and transparency are essential.

The question is straightforward: does this transaction serve the best interests of beneficiaries, or should these institutions maintain their current strategic positions in IJM?

It is imperative that GLICs prioritise their fiduciary duties above all other considerations, and to make their decision-making as transparent as possible to the rakyat whose futures they hold in trust.

Mazli Noor serves on the boards of several public and private companies and is an FMT reader.

The views expressed are those of the writer and do not necessarily reflect those of FMT.