Friday, November 26, 2021

Questions raised on Malaysian company’s multi-million investment in UK

Ultimately, such announcements are often 'a convenient way' of collecting money on the assertion that an IPO of the company's shares will be held.

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A pledge by a company linked to a controversial Malaysian businessman to invest £60 million (RM342 million) in the UK has ruffled feathers within the community of businesses and investors there, who cite similar announcements in the past which they claim were never followed up on and had “amounted to naught”.

“In the end, it is a convenient way of collecting tonnes of money on the assertion that an initial public offering (IPO) of the company’s shares would be held,” said an investor familiar with the “tactics” by companies to raise funds by engaging with senior government trade officials.

MalaysiaNow cannot independently confirm the claim and has opted not to name the businessman.

A trade announcement by the UK government had included the pledge as part of some £10 billion secured from investors during an investment summit held in London last month.

It is said that the company pledged £30 million for the construction of “sustainable modular homes” that would create more than 200 jobs, and the same amount for a recycling facility.

When contacted, a UK trade representative in Kuala Lumpur confirmed a statement issued by 10 Downing Street, but said it was unable to divulge details of the nature of investment pledged by the Malaysian company.

The company has not responded to MalaysiaNow’s queries.

But an industry veteran questioned the pledge, saying a similar investment promise in the UK not long ago had led to nothing despite millions of pounds collected for IPO investments “that never took off”.

Pre-IPO is a form of fundraiser for companies to gather enough money ahead of their public listings, where investors are offered a discount for the purchase of stocks.

“Investors are willing to invest in pre-IPO over the potential returns of the planned business, and highly publicised official announcements would be the best way of convincing them,” the London-based businessman told MalaysiaNow.

He warned that many companies have a history of not doing an IPO despite collecting funds from potential investors.

He cited how the same Malaysian company in 2015 announced a £12 million investment as part of a grand plan by the UK government to boost the economies of cities in the northern part of Britain.

“A similar recycling facility was also part of the deal. And it earned praise from an unsuspecting David Cameron, as it is understandable that any investment would be a political boost,” he added, referring to the British prime minister at the time.

Three years later, the company said its listing plan had been shelved due to difficult market conditions.

Yet, the company targeted US$20-50 million in pre-IPO funding, up from an earlier US$6-10 million, ahead of a potential listing in the London market in November 2018.

“You see, politicians are not savvy about investment details. They are good at making announcements,” the businessman said.

“In this case, they would embrace anyone making an announcement of investing millions in the economy, when in many cases, it is a ruse to collect pre-IPO investments, only to never do the IPO,” he added.

“In the end, all the investments go up in smoke.”

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