KUALA LUMPUR, March 12 — Lembaga Tabung Angkatan Tentera’s move to bring Boustead Holdings Bhd private had stirred discussion on whether statutory funds should opt for a more diverse investment rather than concentrating on one.
“The moment these statutory funds become a significant shareholder, it becomes a moral hazard of sorts, of which it is obligated to stay despite poor performance because it is ‘yours’, and you start to intervene, throw more money at the problem, which is other people’s money, monies on which you should secure returns,” Nungsari told Bernama.
BHB’s 65 per cent unit, Boustead Heavy Industries Corp Bhd has been struggling with a RM9.13 billion contract awarded in 2011 to build six littoral combat ships. None has been delivered as yet.From the standpoint of investors, he believes that holding dominant interests in corporations is a poor strategy as it is tantamount to crowding out the public share market.
“At any rate, LTAT is relatively modest compared to the others and the cost about RM10 billion, but it probably has the most highly concentrated portfolio and with the transformation plan going on, they are trying to fix the issues afflicting Littoral Combat Ships and Pharmaniaga Bhd.