Kenanga ... Feb 2009

A former shareholder of Southern Bank Bhd, Tan Sri Syed Yusof Syed Nasir, has returned to the financial services scene. He emerged as a substantial shareholder of local investment bank K&N Kenanga Holdings Bhd.

Syed Yusof had acquired a 8.2% stake in the investment bank, or 50 million shares, through an offmarket married deal. It is speculated that he acquired the shares from Kenanga’s managing director Datuk Ramli Ismail. Ramli disposed of 50 million shares in two separate transactions on Jan 31 and Feb 13 2009, ceasing to be a substantial shareholder.

Ramli, who managed Kenanga with a 10.7% block which he had held since 2007, sold his interest during Dec – Jan 2009.

Syed Yusof, or known as Jo-Jo to his friends, had entered the financial services sector in 2002 when he emerged as one of the major shareholders of Killinghall (M) Bhd — the company that held a substantial block of shares in Southern Bank back then. He also had a direct interest in Southern Bank and his partner was the present Sultan of Selangor.

They sold their entire interest to Bumiputra-Commerce Holdings Bhd (BCHB), sparking a protracted corporate battle which eventually culminated in Southern Bank’s Tan Sri Tan Teong Hean losing his fight to keep the bank. BCHB completed the merger with Southern Bank in June 2006. Syed Yusof walked away with a good deal for his interest in Killinghall and Southern Bank as the corporate battle raised the acquisition price.

Going by the past, industry observers believe Syed Yusof’s entry into Kenanga could spell interesting times for the investment bank. Syed Yusof has always been a smart investor. What he has planned for this investment is unknown… but it’ll be interesting to watch and see what happens moving forward.

Apart from Southern Bank, Syed Yusof also walked away with handsome profits when he acquired and sold his stake in Landmarks Bhd within a space of two months to casino operator Genting Bhd. That was in August 2006.

Syed Yusof has vast experience in the property development as well as the hotel and entertainment industries. The businessman owns several hotels in the country, including the Concorde Hotel Kuala Lumpur and the Casa del Mar in Langkawi. He also has a stake in the Four Seasons Hotel and Service Apartment in Kuala Lumpur — a project that was put on hold but is reported to have commenced building again early this year (2009).

Syed Yusof generally tries to keep a low profile but his close friendship and business partnership with the Sultan of Selangor, coupled with his investment moves, sometimes put him in the spotlight.

Nevertheless, his entry into Kenanga is certainly one to watch. Will he stay long as a shareholder or is this a preclude to a significant shareholding change in the company?

K&N kenanga’s equity structure is not reflected in its management. The largest shareholder is CMS Capital Sdn Bhd, with a 25% stake. The second largest block is held by Deutsche Asia Pacific holdings, with 16.55%, followed closely by K&N Kenanga’s executive chairman and co-founder Tengku Noor Zakiah Tengku Ismail, with a 16.51%.

The pertinent point here is that there were parties who were interested in the IB. Furthermore, considering Syed Yusof’s previous deals, it would not come as a surprise if he divested his stake within a few months.

Nevertheless, Ramli’s latest move by the market wondering if it is a preclude to more shareholding changes in Kenanga. Industry observers say there may be more interesting times for the company, with a possibility that newly appointed group executive director Tengku Zafrul may acquire a stake.