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Tuesday, March 9, 2010

Why EPF want to acquire MRCB?

These are possible reasons:

(a) It is a way for the connected shareholders to cash out so they can use the proceeds to invest in foreign markets which give higher return compared to MRCB. No one will buy up MRCB except for EPF who is remotely controlled by someone.

(b) It is a way for the government to share the country growth with EPF contributors “you and I”. MRCB has high chance to secure government lands in KL. It also means higher dividend yield in the future since EPF is investing more of its fund in equity now rather than bond.

(c) If EPF has successfully acquired MRCB, MRCB can raise funds from EPF, to fund the land price and development of government lands in KL for 10 years. Construction contracts will then be given to connected parties. Government can also use the proceeds from the sale of government lands to pay its debt. And there are various loop holes in construction and development to suck the cash out

(d) Malaysia is running on deficit already and it would be too obvious and unpopular to announce huge development to be funded by government. Hence, using EPF to fund development is the best “not so obvious” way. Whether EPF will benefit from it will remain unknown. But what is certain is that “reaping the money today is less risky than trying to get back the money 5 years later”. Shareholders of MRCB and connected parties understand this principle very clearly.

I don’t know the actual answer but looking at the direction which EPF is heading, I better take out my EPF as soon as possible now.

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