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Embattled Asiasons’ heads to close chapter on stock gyrations and move on
Anita Gabriel, Straits Times
19 October 2013
Step inside the sparsely furnished office of Asiasons Capital in China Square Central and you soon see that its founders are deep into damage control after two tumultuous weeks.
The embattled private equity firm has been whiplashed by wild gyrations in its stock price that have in turn kick-started the rumour mill - while wiping out a whopping $2.6 billion off the firm’s market value just this month. The aim now is to put some space between the share market ructions and the firm’s actual day-to-day business.
“The share price volatility has absolutely no link or association with Asiasons’ operations,” said chairman Mohammed Azlan Hashim, a prominent corporate figure in Malaysia who sits on the boards of sovereign wealth fund Khazanah Nasional and IHH Healthcare.
“They (some people) are trying to paint us (as) a bunch of cowboys out to do bad things, but we are long-term shareholders of this company.”
Shares in the company, along with those of LionGold and Blumont Group, were labelled as designated securities by the Singapore Exchange (SGX) on Oct 7 following sharp price swings.
The unenviable label, which brings tough restrictions on investors willing to trade in the shares, will be lifted by the exchange on Monday.
That will end an anxious time for Asiasons and means it can begin getting its business back on track, away from the unwelcome glare.
“This is a positive message as it obviously means that the volatility is under control. It’s a good step forward,” said joint-managing director Jared Lim.
It also means one fewer hurdle as it re-negotiates a major deal to acquire a strategic stake in Houston-based Black Elk, which produces around 14,000 barrels of oil a day. The acquisition, which was announced a month ago, was to be paid in Asiasons shares, then at $1.1948 apiece.
But the plunge in the company’s shares over recent weeks - they closed on Friday at 12.8 cents - has left the buyout hanging by a thread. “We still need to find the right equilibrium and we’ll revisit the deal sooner rather than later,” said Mr Lim.
Asiasons has a fund management portfolio of about US$300 million (S$372 million) and counts Malaysia’s deep-pocketed state-owned funds such as Ekuinas and government pension scheme Kwap as clients. At current price levels, Mr Azlan admitted that the shares are hovering near the level they were at in 2007 when he and his two partners took control of Asiasons, then a human resources technology firm called Integra2000 and shifted its business focus to private equity investment.
“We have built up this firm painstakingly and there’s a world of difference between the firm today and seven years ago,” he said in an interview with The Straits Times.
Mr Azlan, together with the firm’s other co-founders Mr Lim and Mr Ng Teck Wah, are clearly irked over speculation linking their firm with others, including Blumont, Ipco International and Innopac Holdings, that have seen sharp movements in share prices.
The three men collectively hold 53 per cent of Asiasons and there are no other significant or cornerstone investors holding more than 5 per cent.
“This so-called web of cross shareholdings makes it appear as if we are in cahoots in this whole thing,” said Mr Lim. “We are our own men and no one else is influencing us.” Asiasons owns 9 per cent of LionGold and has a 27 per cent stake in ISR Capital which it plans to eventually divest.
Mr Azlan reiterated that there are no other connections to the other firms. “We have absolutely no relationship with these other firms, including Blumont. The only relationship there is Jared, a director, and his wife but that’s not related to Asiasons per se,” said Mr Azlan.
“She went ahead and made the decision herself and it was a small investment which involved shares. Now she and her partners are looking to sell their stake as it was purely an investment and not part of their business,” said Mr Lim.
The three founders also categorically denied another topic hot in the market rumour mill that Asiasons is connected to well-known Malaysian stock investor and businessman Soh Chee Wen.
“I don’t even know him but I’ve heard of him, of course,” Mr Azlan said.
Meanwhile, the Asiasons management team is working on a full report on the gruelling events of recent weeks.
Mr Azlan and partners are keen to figure out what led to the uproar, which could bring reputational fallout, and move forward with the business.
He noted that records indicated that there was some short-selling of LionGold shares just before the SGX moved to halt trading on the three counters on Oct 4.
“People may have seen that and assumed we (Asiasons) would be significantly impacted by it as shareholders and that may have caused a knee-jerk (reaction),” Mr Azlan added.
The three also reiterated that none of them have sold “a single share” in Asiasons over the past six years. That’s quite a contrast from what has been taking place at LionGold and Blumont, which have seen significant trades recently involving insiders, particularly disposals and forced selling involving directors.
Mr Azlan added: “We clearly want to get to the bottom of it but it’s also important for us to focus on the job at hand. This whole thing has been a complete distraction for us.”