KHAZANAH Nasional Bhd's choice of Censof Holdings Bhd (Censof) as the winning bidder for its 45.03 per cent stake in Time Engineering Bhd (TEB) appears to favour experience as a selection criteria.
Its divestment of TEB at 20 sen a share for a total of RM69.8 million was made, according to sources familiar with the deal, following an extensive tender process to select a new shareholder that can further develop TEB.
Under Khazanah's stringent divestment procedures, the bidders would have had to be scrutinised by an Independent Evaluation Panel (IEP) in a transparent three-stage open tender process.
Based on its previous divestments, it is likely that Khazanah stuck to its proven formula of divesting its subsidiaries to bidders that it has the confidence in to nurture TEB.
The IEP would have most likely comprised individuals with extensive knowledge and experience in the corporate and IT sectors, similar to what Khazanah did when it divested Time dotC om in 2008.
"Khazanah made it very clear that the winning bidder must have strong entrepreneurship, leadership, business acumen and management capabilities, as well as the technical and financial capabilities to take TEB to the next level, and potentially secure its continued participation in the new uCustoms concession after the current one ends in 2014." said one of the sources.
The existing uCustoms concession is TEB's only significant revenue earner but its participation after 2014 has been one of the factors for Khazanah's divestment price.
"It's like buying a leasehold property that is coming to the end of its tenure with no indication of extension yet," said an analyst, adding that Censof and TEB together would need to work hard to secure the new uCustoms concession.
With the uncertainty of TEB's participation in the uCustoms system, absence of a strong management team at TEB and with two of the three main TEB subsidiaries, TEB Systems Integrators Sdn Bhd and TEB Quantum Technology Sdn Bhd, operating at a net loss for the past two and five years respectively, the divestment price is an accurate reflection of the value and more realistic than what the market has been speculating.
The entry of Censof, with its strong track record and capability, should provide TEB shareholders with the confidence to continue their journey with the company given its history of successful post-merger integration, having conducted three acquisitions in the previous three years.
The divestment of TEB was announced last December and is part of Khazanah's efforts to assist the government in encouraging entrepreneurship and growing Bumiputera equity and in line with its overall non-core asset divestment strategy.