Malaysia Armed Forces Fund Weighs Taking Boustead Private

(Bloomberg) -- Malaysia’s armed forces pension fund confirmed that it’s considering taking conglomerate Boustead Holdings Bhd. private.

Lembaga Tabung Angkatan Tentera, which owns 59% of Boustead, said in a statement late Thursday that it expects to propose an offer price of 80 sen ($0.18) per share if it decides to proceed. That compares with Thursday’s close of 63 sen. The offer is indicative only and non-binding, the fund said.

The statement followed a Bloomberg report Wednesday that LTAT was weighing options for its stake in Boustead. The military fund has received approval for a loan to finance the deal, people with knowledge of the matter said. Shares in Boustead, whose interests span real estate, financial services, plantations and manufacturing, surged 16% on Wednesday and a further 6.8% on Thursday.

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 and discussions still at an early stage, the people said.

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 9.5 billion ringgit 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. Last year was a difficult one for the fund due to neither company paying a dividend, the company told Bernama.

©2020 Bloomberg L.P.