Bersatu Youth chief criticises government's claim on BlackRock's role in improving Malaysian airports

SHAH ALAM - Bersatu Youth chief Wan Ahmad Fayhsal Wan Ahmad Kamal has slammed the government's claim that controversial global investment firm BlackRock's involvement in managing Malaysian airports would improve their management and ranking.

He also claimed that the government has a shallow understanding of the implications of the decision to allow the New York City-based investment firm with alleged links to Israel to own shares in Malaysia Airports Holdings Bhd (MAHB).

On May 15, Gateway Development Alliance and its shareholders announced a pre-conditional voluntary offer to acquire all the shares in MAHB at an offer price of RM11.00 per share.

According to a Bursa Malaysia filing, the Consortium was led by Khazanah Nasional Bhd (Khazanah) via its wholly owned subsidiary UEM Group Bhd and the Employees Provident Fund (EPF).

Its shareholders also comprise a wholly owned subsidiary of the Abu Dhabi Investment Authority (Adia) and funds managed by Global Infrastructure Partners (GIP).

The offer valued MAHB at RM18.4 billion, with a price-to-earnings ratio of 37.7x for FY 2023.

As of May 14, the Consortium and its parent companies in aggregate own 41.1 per cent of MAHB’s issued share capital.

Upon completion of the offer, Khazanah's stake in MAHB will rise from 33.2 per cent to 40 per cent and EPF from 7.9 per cent to 30 per cent.

It was reported that Malaysian investors will collectively own 70 per cent of MAHB, while Adia and GIP will hold the remaining 30 per cent.

Involving GIP has sparked political controversy where BlackRock, the largest international asset management company, perceived as pro-Israel, has been showing interest in acquiring the infrastructure investment company, which implied that it might potentially have future indirect influence on MAHB as well.

BlackRock is also known to have investments in a wide array of assets, including tech giants like Apple, Facebook and Google, all of which were pro-Israel companies.

Opposition to BlackRock's involvement would imply a broad boycott of many interconnected global investments.

Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz defended the government against the allegation by saying that if people were to boycott BlackRock, then they would have to boycott their commonly used iPhone by Apple too, which was funded by BlackRock.

In response to this, Wan Ahmad Fayhsal said doing so would not be sensible, while also highlighting that the brand was allegedly pro-Israel.

"It was a mindless answer from a UM (Universiti Malaya) economy student. Apple products and airports are all strategic assets and the main reason for investments to be made, which obviously shows that he and the government have lost their plot.

"In terms of boycotts, divestments and sanctions, we live in a world where we do not have full control of our products and our investments. In matters that we still can control, we should control and do our best to reduce the impact of oppression on injustices," he said.

He question that if people could abide by the environmental, social and governance (ESG) principles, which were the responsibility metrics and standards for potential investments and slowly decouple from all the bad things in terms of political investment, why can't the government do the same about BlackRock.

The opposition and pro-Palestine non-governmental organisations (NGOs) such as the Boycott, Divestment and Sanctions (BDS) Malaysia also claimed that the proactive proposal of the Consortium might involve BlackRock, the international fund management company perceived as pro-Israel, having control of 30 per cent of MAHB shares through GIP as foreign investors.

Khazanah managing director Datuk Amirul Feisal Wan Zahir said the direct partners in the Gateway Development Alliance project were Adia and GIP, not BlackRock.

While BlackRock has expressed interest in acquiring GIP to enhance its infrastructure fund capabilities, the deal was still under discussion and has not been finalised.

Meanwhile, regarding the government's implied intention to benefit from foreign investors, Wan Ahmad Fayhsal criticised the narrative that BlackRock's acquisition would boost MAHB's revenue, calling it a poorly argued narrative by the government and its supporters.

"This is wrong, MAHB is already profitable, it has a monopoly over 39 airports in Malaysia and they do not make losses, they make good profits year in and year out.

"What's lacking is that it's falling down in terms of competitiveness in comparison to other airports, regionally and globally," he said.

He claimed that airports owned by GIP, including Gatwick, Edinburgh and Heathrow were among the worst, unlike top airports such as Changi, Cheongju, Narita, and Haneda.

"These are some of the best airports not run by GIP and BlackRock, so there is no merit whatsoever, financially and economically.

"This is what Khazanah, EPF and the government are trying to push down our throats, that when we partner with GIP, which runs many major airports in the world and is also owned by BlackRock, it can help us make KLIA (Kuala Lumpur International Airport) and other airports more profitable and competitive in terms of ranking," he said adding that the main issue that the government needed to focus on was management, not profitability.

He also criticised Pakatan Harapan Youth information chief Ammar Atan for calling him hypocritical for not attacking the government in 2021 when BlackRock was involved in managing funds under EPF for the Syariah private equity SMA fund.

He said Ammar had a shallow understanding of the issue.

Wan Ahmad Fayshal said in 2021, there was not any clear genocidal intention of Israel being seen and therefore there was no urgency for the boycott.

"If we were to know that BlackRock invested in Israel and was also heavily involved in helping Israeli kill Palestinians through genocide like what is happening today, I would be the first to protest back then, but we were not informed about this and it wasn't highlighted yet," he said.

Wan Ahmad Fayhsal also highlighted the state of portfolio investments, noting that the Kelantan government permitted BlackRock's ROHM Semiconductor investment about six per cent, to operate locally.

"These are two different situations altogether," he said adding that investment was a complex issue that needed to be viewed from not just one angle.

He also said BlackRock's indirect influence on MAHB would be more about controlling management than gaining returns.

By acquiring 30 per cent of MAHB through GIP, he said they could decide who to appoint in management positions.

He added that managers could choose to own the stake partially or half-dependently and that ether way, with that level of ownership, they certainly wanted to make significant decisions.

He explained that in other investments like EPF among others, they have only invested in a very meagre sum, which was below 10 per cent.

"In MAHB, they want to have some degree of control," he added.

He also urged Prime Minister Datuk Seri Anwar Ibrahim, who is also the Finance Minister to reflect on his decision in making the acquisition happen.

"Not just me but professors from Japan such as Saul Takahashi and other NGOs such as the BDS movement have spoken up about this," he said.

He also brought up that when Tun Dr Mahathir Mohamad was the prime minister in 2019, he (Dr Mahathir) had rejected such a proposal and did not allow MAHB to sell their stakes to BlackRock.

"This is an opportunity for the Malaysian government to show that we walk the talk, but I believe that the PM and some other ministers are tone-deaf in understanding the basic ramifications of our decision in this matter.

"The Malaysian government can do something, they have the political will to cancel this decision if they want to do it," he said.