LTAT bares all on its aborted plan to privatise Boustead Holdings



PURSUANT to our notice to media dated Feb 2 on the proposal relating to the possible privatisation of Boustead Holdings Bhd (BHB), Lembaga Tabung Angkatan Tentera (LTAT) would like to clarify its decision not to proceed with the proposal at this juncture.

To reiterate, circumstances have indeed drastically changed since we first commenced on this journey back in May 2020 and volatility due to the COVID-19 pandemic continues to impact the businesses of BHB and its subsidiaries (Boustead Group), particularly the heightened business risks of the group.

In May 2020, we were in the midst of executing our strategic transformation plan, a component of which involved the need to rebalance our portfolio.

As of end-December 2020, LTAT’s asset allocation remained heavily invested in public equity (58%) with Boustead Group accounting for 31% and the AFFIN Group accounting for 17% of our total assets under management (AUM) of RM9.6 bil respectively.

In the past, LTAT has been heavily reliant on dividend income from Boustead Group. However, since the 2019 financial year, BHB and some of its subsidiaries have not paid any dividends to its shareholders due to its worsening financial performance, driven by major impairments against a backdrop of challenging economic conditions.

In addition, BHB’s share price was at a rock bottom of 35 sen on March 23, 2020 and remained below 50 sen until mid-May 2020 which provided an opportune time for LTAT to privatise.

Opportune time to exit

It was also probably the right time and opportunity for the minority shareholders to potentially exit, given the underperforming share price in spite of the higher underlying value relative to its net tangible assets (NTA) of RM1.60.

The NTA was possibly not accorded by the market for reasons which may include declining profitability, high debt levels and uncertainties surrounding certain key projects of the group, primarily the Littoral Combat Ship (LCS) project and other key projects such as hotels and property.

Given this backdrop, LTAT saw the privatisation as a move to protect the value of LTAT’s investment as well as to pave the way to support the potential restructuring of the Boustead Group which was being planned.

This would help accelerate LTAT’s own strategic transformation plan which involves capitalising on immediate high-impact initiatives as catalysts to address immediate gaps and creating value as we work towards achieving longer-term sustainability.

Since our initial notice to media, the extension of time was required to allow LTAT to undertake all the requisite preparations which included securing funding and resolving the privatisation mechanism and structure as well as the preliminary regulatory approvals required by the relevant authorities.

Unlike other privatisation exercises, LTAT’s circumstances are unique given that it is governed by the Tabung Angkatan Tentera Act 1973.

Littoral Combat Ship


Changing circumstances

However, closer to the deadline of Feb 2, it was a conscious decision by LTAT to allow the deadline to lapse at this juncture considering the changing circumstances surrounding the privatisation which resulted in heightened risks towards ensuring the successful completion of the privatisation.

We were conscious to do this in the best interest of our key stakeholders, particularly our contributors: the Armed Forces personnel.

The changing circumstances included:

  • Potential uncertainties as a result of prolonged COVID-19 measures that could further delay the privatisation journey;
  • Further uncertainties to the key businesses of Boustead Group impacted by COVID-19, namely banking, hotels, property and retail petroleum, among others;
  • Ongoing uncertainty surrounding the LCS project;
  • Leadership changes/transition both at LTAT and Boustead which requires sufficient time to review ongoing projects/initiatives; and
  • Clarity on Boustead Group’s rejuvenation plan, including its plan to address its debt levels

While the privatisation may not be timely at this juncture, the lapse in deadline will enable us to review and reassess our strategies as part of our intention to fully assess and further fine-tune LTAT’s five-year strategic transformation plan.

LTAT remains steadfast in continuing its transformation journey towards becoming a world-class pension fund. In line with our contributors’ retirement objectives, LTAT shall remain true to its nature as a long-term investor and a custodian of patient capital, hence we shall not hesitate to be judicious in carrying out our investment strategies.

LTAT’s current focus is on the execution of its strategic asset allocation (SAA) framework which was completed towards the tail end of 2020.

All is not lost

The framework sets LTAT’s long-term targets to deploy capital towards better diversification of our portfolio of investments. In this regard, LTAT intends to re-balance its portfolio by increasing fixed income investments (20%), reducing real estate and private equity exposure (10% each), increase diversification of its public equity portfolio (50%) and the remaining in other asset classes including money market instruments.

At a later stage, LTAT also intends to commence its plan for international diversification similar to other peer institutions.

While full implementation of the initiatives as part of the strategic transformation plan would take a few years and continues to be a work in progress, LTAT will continue to assess its options in respect of creating value from its existing key investments, including reviewing merits of any potential value creation exercise, subject to commercial viability to LTAT and BHB, within the boundaries of the Take-over Rules and relevant regulations.

At this juncture, LTAT will continue to work closely with BHB in terms of providing support towards its ‘Rejuvenating Boustead’ plan and future growth strategies.

LTAT remains committed to our mandate to generate sustainable returns in fulfilment of our duty to our contributors, the Armed Forces personnel.

This commitment comes above all else and will guide us as we continue to make informed decisions in relation to managing our portfolio, including any decision surrounding potential value creation exercises. – Feb 5, 2021



Lembaga Tabung Angkatan Tentera (LTAT) is a statutory body which manages the pension fund for certain members of the Malaysian Armed Forces.

The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.


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