Issue 34

Dr M: ECRL and Sabah gas pipeline projects cancelled

Tun Dr Mahathir Mohamad said the multi-billion East Coast Rail Link (ECRL) and Trans-Sabah Gas Pipeline (TSGP) projects are cancelled for now.

The prime minister said Chinese President Xi Jinping and premier Li Keqiang understood the reasons behind the cancellation of the two Chinese government-backed projects.

“I have explained to them and they understood the situation and accepted them,” Dr Mahathir told journalists at the end of his five-day official visit to China.

“Initially, there were some misunderstandings but now they understood why we do it. I don’t think China wants us to be bankrupt,” said Dr Mahathir.

Dr Mahathir said the projects involved huge amounts of money and Malaysia does not really need them at the moment, amid the country’s financial situation with high debt left by the previous government.

“The projects (will) not go on. Our priority is reducing our debt. For the moment, they are deferred until we can afford,” said the prime minister, but when clarified further by journalists, he said, “Yes, they are cancelled at the moment.”

ECRL, the RM81 billion-project spanning 688km linking Port Klang and Kota Bharu, was launched last year and slated for completion in 2024, while TSGP involves building a 662km gas pipeline from Kimanis to Sandakan and Tawau costing about RM4 billion.

Both projects have been suspended since July.

Dr Mahathir had previously said that the current terms for the projects undertaken by the previous government were not good which, among others, entailed that the money should be paid regardless of the construction progress.

The present government had also detected the condition of the contract given to the Chinese companies, including workers and materials imported from China, leaving Malaysians not benefiting from the projects.

Dr Mahathir lambasted his predecessor Datuk Seri Najib Tun Razak for his stupidity in carrying out the projects which did not benefit the country but burdening the present government with huge debt.

“The delegation is also here with the objective of looking to resolve the debt incurred by Najib when he was the prime minister. Debt of billions of ringgit for projects that are not beneficial to the country,” said Dr Mahathir.

“We have to pay for the stupidity of Najib…very stupid…detrimental to our interest,” he said.

Dr Mahathir said no more project deals detrimental to Malaysia’s interest would be allowed in the future.

Asked on compensation to be paid following the cancellation of the projects, he said it would be discussed later.

Asked on the Chinese investors’ sentiment towards him while meeting them during his visit, Dr Mahathir said they also understood his explanation that the two projects are not viable at the moment.

“They know that I am not anti-Chinese. They understand how we have to look after the interest of Malaysia because the projects are not viable. They know we are a business-friendly nation,” he said.

Dr Mahathir also stressed that he had explained to them that foreign direct investment was not about buying land and building new township as such initiatives could be carried out by the local people.
Malaysia needed them to bring investment, technology and use Malaysian workers and materials so that Malaysians at large could benefit, he said.

Answering another question, Dr Mahathir said the Council of Eminent Persons would continue their work to help the government and it was not limited to 100 days only. – BERNAMA.

  From – New Straits Times

Uber brings on CFO ahead of potential 2019 public offering

Back in May, Uber chief executive Dara Khosrowshahi told the crowd at a conference hosted by Recode that the ridehailing giant was aiming to go public by the end of 2019. “We’re on track,” he said at the time. “I need a CFO, though.”

Khosrowshahi is getting his wish. Uber has brought on Nelson Chai (pictured) as its new chief financial officer, a move that will only add to the IPO speculation that’s swirled around the company in recent months. Chai joins Uber more than three years after previous CFO Brent Callinicos departed the company. The role has been vacant ever since, and the company was said to be struggling to fill the position.

Chai has the type of financial experience expected of someone leading the charge to take a company public. He was most recently CEO of insurance provider Warranty Group, and before that he spent five years as an executive at financial specialist CIT Group and two years as CFO of Merrill Lynch. Earlier in his career, Chai was CFO of digital trading company Archipelago during the run-up to its IPO and oversaw its merger with the New York Stock Exchange, which became a public company as a result of that deal. 

Chai told The New York Times on Tuesday that he wouldn’t be able to comment on whether Uber is on track for a public offering next year until he’s settled into his new job. Still, the appointment of a CFO is a solid signal that the ridehailing juggernaut is inching closer to a public debut.

Uber's long march toward the public markets 
With a valuation of $62 billion, Uber is the most valuable VC-backed company in the world. If it were to go public at a flat valuation, it would produce the second-largest VC-backed IPO of at least the last decade for a US company, behind only Facebook. And in terms of timing, Uber is overdue for a public offering. The company will be 10 years old next year, and the median time to IPO for North American and European companies is just over eight years, per PitchBook data.

Uber’s financial picture could be problematic for some investors as it gets closer to the public markets. The company released its 2Q 2018 financials last week—a voluntary move, as it’s not required for private companies—and revealed that it posted an adjusted loss of $404 million in the second quarter, compared to $304 million in 1Q. But even though losses are increasing, Uber is still raking in revenue and attracting users. The company recorded $2.7 billion in 2Q revenue, up 8% from the previous quarter, and its gross bookings rose about 6% to $12 billion. 

Finances aside, Uber has spent the last year trying to clean up its image and workplace culture. In February 2017, Susan Fowler published a now-famous blog post accusing company leadership of rampant sexual harassment and discrimination. In the wake of the post, the company faced several scandals, culminating in the departure of founder and former CEO Travis Kalanick. Since Khosrowshahi was brought on nearly a year ago, he’s been working to grow the company into a more mature business that’s capable of trading on the public markets. 

Although the company’s reputation has perhaps improved since then, it has still tackled its fair share of struggles, including a federal investigation into gender inequality that was launched earlier this summer and several high-profile executive departures.

From – PitchBook

KKR group eyes KFC, Pizza Hut in potential mega-deal

A consortium that includes KKR, Hillhouse Capital and Baring Private Equity Asia is considering a take-private buyout of Yum China, a publicly traded operator of fast food restaurants with a market cap of some $13.6 billion, according to Bloomberg. Yum China spun out of the larger Yum! Brands business in 2016 and began trading on the NYSE. The company, which owns the rights to KFC, Pizza Hut and Taco Bell in China, controls more than 8,000 restaurants in the nation.  

DCP Capital—which is led by former KKR executive David Liu—and the China Investment Corporation sovereign wealth fund are also said to be part of the would-be takeover group. It's believed the potential buyers could be eying an acquisition with the ultimate aim of re-listing Yum China in Hong Kong at some point in the future.  

A deal would mark private equity's second major fast-food deal in China in the past year-plus. Last summer, The Carlyle Group and CITIC Capital Partners purchased the McDonald's business in mainland China and Hong Kong for more than $2 billion, acquiring the rights to nearly 2,500 locations. 

A takeover of Yum China at a value around the company's current market cap would be set to become the largest private equity deal involving a company in the restaurants & bars sector anywhere around the world since the start of 2008, according to the PitchBook Platform. The top spot currently belongs to JAB and BDT Capital Partners' $7.16 billion purchase of Panera Bread completed last summer.  

The report also comes at a time when major buyout shops are showing more interest than ever in Asia. KKR, Carlyle and Blackstone are among the industry heavyweights to close major new vehicles focused on the region in the past two years—and with billions stocked up, more headline-grabbing deals will surely be on the way.

From – PitchBook


Falcata closes biggest US debut buyout fund of 2018
Falcata Capital has raised $1 billion for its first private equity fund, becoming the first firm in the US this year to hit 10 figures for its inaugural effort. Based in Houston, the firm will target companies in the enterprise software and tech-enabled services sectors with investments of between $50 million and $200 million. 

The vehicle ties two others for the title of largest debut buyout fund closed in the US since the start of 2012, per the PitchBook Platform. And while those other two firms were led by alumni of private equity powerhouses, the background of Falcata's founders is a bit more unorthodox.  

Gamut Capital Management, which closed a $1 billion maiden fund in early 2017, is led by Stan Parker and Jordan Zaken, two former senior partners at Apollo Global Management. Cove Hill Partners, which wrapped up a $1 billion debut last September, was formed by one-time Bain Capital executive Andrew Balson. 

Falcata, meanwhile, was co-founded by Bob Brockman and Robert Burnett, two former executives at Reynolds and Reynolds, a software company that provides technology to car dealerships.  

Brockman—who will retain his position as Reynolds and Reynolds CEO—first got into the auto software industry nearly 50 years ago, when he founded a company called Universal Computer Services. In 2006, UCS bought Reynolds and Reynolds and assumed the takeover target's name. Burnett, meanwhile, joined UCS in 1991 and spent the past five years as senior vice president of corporate development at Reynolds and Reynolds.  

Brockman and Burnett tapped into that retail background for their fund's first takeover. Along with closing its $1 billion fund, Falcata announced the acquisition of Xpressdocs, a provider of brand management, direct marketing and other ecommerce services for enterprises and franchises. 

From – PitchBook

Cofco investing in Malaysia to export palm products with SD Plantation

China's top food company Cofco Group Co Ltd is partnering Malaysia’s biggest palm oil company Sime Darby Plantation Bhd (SD Plantation) to produce cooking oil, bakery fats and specialty fats in Malaysia for the global export market.

"We look forward to seeing the positive results of combining our research and development capabilities with Cofco’s expertise in advanced health-based food research," SD Plantation executive deputy chairman & managing director Tan Sri Mohd Bakke Salleh said, in a statement.

He said this partnership with Cofco reflects SD Plantation’s aspiration in promoting the health benefits of palm oil and to produce certified-sustainable, premium palm oil products such as palm tocotrienol, red palm olein, and palm kernel oil, for the global market.

On the last day of his official visit to China, Malaysia’s Prime Minister Tun Dr Mahathir Mohamad, today, witnessed the signing of a set of memorandum of understandings (MoU) between SD Plantation and Cofco.

Also present were Primary Industries Minister Teresa Kok and Malaysian Palm Oil Board (MPOB) director general Datuk Ahmad Kushairi Din.

Beijing-headquartered Cofco is represented by its president Patrick Yu while Bakke signed on behalf of SD Plantation.

Through these initiatives, Bakke said both SD Plantation and Cofco aims to create greater demand for certified sustainable palm oil and increase trade volumes between both countries.

"China, has for many decades, been a traditional market for Malaysian palm oil. Our partnership with Cofco is a significant milestone in strengthening trade relations between Malaysia and China.

He said the MoU includes a joint research on the health benefits of palm oil, developing capabilities to manufacture specialty oils and fats, and establishing joint sales and marketing activities to promote premium palm products in China.

"We applaud Primary Industries Ministry for initiating this collaboration and convey our highest appreciation to the government for its continuous support to the Malaysian palm oil industry," said Bakke, who is also MPOB chairman.

Yesterday, MPOB signed a MoU with Tsinghua University on the promotion of Malaysian biofuel in China.

The Malaysian Rubber Board had also signed a MoU with Hainan State Farms Investment Holdings Group Co for technological collaboration in rubberised bitumen road as well as rubber tapping automation and mechanisation.

Kok is leading a delegation to China to promote Malaysia’s commodities. She will have several high-level bilateral discussions with Zhong Shan, China’s Commerce Minister, to to intensify investments and product development in the palm oil and rubber industry.

Kok will also meet with Ni Yuefeng, Minister of General Administration of Customs, to discuss easier facilitation of export of Malaysian palm oil to the Republic and formulate mechanisms related to food quality or safety risk.

She is scheduled to arrive in Guangzhou on 23rd August 2018, where she will visit FGV China Oils Ltd Co for an insight into the group’s operations in China.

From – News Straits Times

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