$MPHBCAP / 5237 (MPHB CAPITAL BERHAD): Privatization in Progress

Background:

- MPHBCAP has received a privatization proposal at RM1.70 per share from its primary stakeholder, Tan Sri Surin Upatkoon.
- Upatkoon intends to delist the company through a selective capital reduction amounting to RM748.11 million, opting out of maintaining its listing status.
- Presently, Upatkoon and his family collectively hold a 43% stake in MPHB.
- Additionally, Upatkoon is a major shareholder of $MAGNUM / 3859 (MAGNUM BERHAD).

Likelihood of Success:

- Drawing from past events, Upatkoon successfully privatized $MWE / 3921 (MWE HOLDINGS BERHAD) in 2018 using a similar method, involving a selective capital reduction and a corresponding cash repayment of RM1.75 per share.
- However, it's notable that Upatkoon's first attempt to privatize MWE in 2015, offering RM1.70 per share, was unsuccessful.
- Comparing the current situation with MWE's privatization, where the company's net tangible assets (NTA) were RM2.40 and the privatization price was RM1.70, representing a 41% discount, investors might be wary of a similar outcome.
- Considering the previous privatization of MWE, where the NTA was RM2.41 and the privatization offer was RM1.75, it appears that the market is showing some skepticism, possibly anticipating a higher offer from Upatkoon.

Valuation:

The current share price of RM1.62 versus the privatization offer of RM1.70 translates to only a 4.9% discount. When factoring in brokerage fees and other expenses, the attractiveness diminishes.

[This is not a recommendation to buy or sell, but solely for educational purposes.]