Malaysia’s YTL Hunts for U.K. Acquisitions Amid Brexit Shock

  • Co. says Brexit ends 8-yr lull in investment opportunities
  • Co. hunting for more assets with 13 billion ringgit war chest

YTL Corp., the Malaysian conglomerate which snapped up a British utility from the now defunct Enron Corp. more than a decade ago, is looking for bargains again after the U.K. vote to leave the European Union sent assets plummeting.

The company, one of Malaysia’s biggest investment holding groups with utilities and property in Britain, will look for infrastructure utility assets in the U.K. over the next two to three years, Francis Yeoh, its managing director, said in an interview. Not since 2008 has there been an opportunity for it to scout for assets at attractive prices till now, he said. The company has about 13.5 billion ringgit ($3.3 billion) in cash that could be used to fund expansion.

"Assets are already more realistically priced, this time by default rather than design,” Yeoh, the 61-year old managing director of family-owned YTL, said at his penthouse office at the company’s headquarters in Kuala Lumpur. “We have always loved assets like utilities that are long term. Investors like myself buy long-term businesses.”

The pound had a record plunge on Friday and the market value for U.K. stocks shrank the most since at least 2003 following the fallout from the historic vote, sending global markets into a tailspin and threatening prospects for foreign investments there. While Brexit may prompt overseas companies to steer clear from the U.K., Yeoh sees it as an unprecedented opportunity to snap up assets at cheaper prices.

YTL, through its power unit, bought Wessex Water Services Ltd. in 2002 in its first foray into the European utilities market aimed at widening its business beyond Asia. The group’s other investments in the U.K. are the Gainsborough Hotel in Bath and the former Filton airfield in Bristol, where the supersonic Concorde airliner was largely designed and build, according to the British Broadcasting Corp. YTL has business interests from Australia to China, owning power plants, shopping malls and infrastructure projects.

“I’ve been lamenting the lack of opportunities over the past eight years, and perhaps this, sadly is a trigger for it,” he said.

Acquisitions and investments announced in Europe for the utilities industry amounted to $21.6 billion last year compared to $76.4 billion in 2008, data compiled by Bloomberg show. Shares of YTL fell 0.6 percent at Monday’s close in Kuala Lumpur. The stock is up 6.7 percent from this year’s low in January.

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Yeoh said Britain has the best “transparent and coherent” regulatory framework for foreign investments. “I’m not worried about my investments in the U.K. We don’t speculate in currencies and eventually it will even out in the long term.”

Also, Brexit could be a catalyst for EU and the world to reform their regulatory framework as the people’s anger largely stems from infrastructure needs that are not addressed quickly enough, he said. “Immigration would be a huge problem in the future if infrastructure needs are not built.”

"I’m quite sure we will be getting quite busy for the next two or three years, especially now that the opportunity has come back,” he said.

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