Private equity group RRJ Capital proposes $716 million bid for PLUS Malaysia

SINGAPORE (Reuters) - A consortium led by Asian private equity group RRJ Capital has proposed buying PLUS Malaysia Bhd, the country’s biggest expressway toll firm, for 3 billion ringgit ($716 million), a document seen by Reuters showed.

In a proposal sent to PLUS parent and Malaysian sovereign wealth fund Khazanah Nasional Bhd [KHAZA.UL], Richard Ong, chairman of RRJ Capital, said the investment firm would cut toll rates by 20% across the board after a successful acquisition.

“RRJ is prepared to move quickly with our financial and technical advisors to begin negotiations and due diligence if our proposed offer is accepted,” it said in the letter dated Sept. 25.

Co-founded by Malaysian brothers Richard and Charles Ong, RRJ operates from offices in Hong Kong and Singapore. The brothers are veteran dealmakers who have raised billions of dollars at RRJ and invested in a number of companies globally.

RRJ’s latest move comes as Malaysia’s government, which inherited a debt-laden economy last year, is encouraging the private sector to play a bigger role in the economy. Prime Minister Mahathir Mohamad, however, has struggled to win consensus for related policies.

PLUS Malaysia is 51% owned by engineering infrastructure and services firm UEM Group Bhd, which is a wholly owned subsidiary of Khazanah. State pension fund EPF owns the remainder.

EPF did not respond to a request for comment. Khazanah said it was up to the government to decide on any such proposal.

“There have been several proposals on toll highways. Khazanah itself has submitted its own proposal to the government. Ultimately, it is up to the government to consider these proposals and decide what is best for the country and the people,” a Khazanah spokesman told Reuters.

RRJ said the proposal to buy the firm in its entirety includes the interest of UEM Group and EPF in the redeemable convertible unsecured loan stock issued by Project Lebuhraya Usahasama, a wholly owned unit of PLUS Malaysia.

“RRJ is very focused on making long term private equity investments in Southeast Asia. Our focus will be large companies and major infrastructure investments such as airports, container ports, water treatment plants and toll roads,” it said in an emailed response to a Reuters query.

RRJ said it was open to partnering with Malaysian pension funds and working closely with the government on projects. It declined comment on specific projects.

The proposed acquisition is subject to conditions including an extension of the toll concessions period for an additional 20 years by the government.

Edge Malaysia reported news over the weekend of RRJ’s proposal to acquire PLUS Malaysia.

Reporting by Anshuman Daga; Editing by Christopher Cushing