New substantial shareholder: A file picture of models posing with PELIKAN (5231) Pelikan International Corp Bhd’s ink cartridge refill products. Over the last five months, a new substantial shareholder has emerged in the company in the form of a fund co-founded by former CIMB Bank boss Datuk Seri Nazir Razak.
Interesting changes are taking place in stationery company Pelikan International Corp Bhd.
Over the last five months, a new substantial shareholder has emerged in the company in the form of a fund co-founded by former CIMB Bank boss Datuk Seri Nazir Razak.
This means Nazir joins the ranks of other high-profile investors in Pelikan such as Caprice Capital, a fund founded by former Hong Leong stalwart Paul Poh. Another substantial shareholder in the form of Auctus Ventures Ltd and Nominees, which owns 6.66%, is believed to be linked to high-profile investor Brahmal Vasudevan.
Caprice bought its 4.8% stake in Pelikan at RM1.13 per share in 2014, while Auctus Ventures bought into Pelikan in 2015 when its share price was around 80 sen apiece.
At about the same time as Nazir’s fund’s entry last September, some major board changes were taking place.
And in the midst of all this, Pelikan’s founder and CEO has been buying more shares in the company from the open market.
Last August, Nazir’s private equity (PE) firm Ikhlas Capital Singapore Pte Ltd bought a 10% stake in Pelikan through a private placement exercise.
The deal caught the market by surprise. Ikhlas Capital forked out RM21mil for this non-controlling stake. Notably, Ikhlas Capital paid a market premium of 16% when it bought the Pelikan shares at 39 sen apiece.
At about the same time, several changes took place on the board of Pelikan.
Pelikan’s largest shareholder is pilgrim fund Lembaga Tabung Haji (TH) which has held 26% in Pelikan for more than 12 years. Its cost is said to be close to RM1.80 per share.
That block had been transferred to Urusharta Jamaah Sdn Bhd in December 2018, a wholly-owned subsidiary of the Finance Ministry.
Urusharta was set up to take on non-performing assets held by TH as part of a rescue and restructuring plan of the latter.
Urusharta’s mandate is to carry out rehabilitation and restructuring of assets under its care.
No surprise then that two of the new board members of Pelikan are representatives of Urusharta. They are Ahmad Al-Farouk Ahmad Kamal and Najuuwa Sabli.
Ahmad is the head of equity with Urusharta Jamaah, while Najuuwa is the senior manager of equity. Ahmad is a senior investment banker whose last position prior to Urusharta was country executive director for Deutsche Bank Malaysia, while Najuuwa was a fund manager at Permodalan Nasional Bhd.
Joining this list of ex-bankers on the board of Pelikan is Kenny Kim, the co-founder and CEO of Ikhlas Capital.
Kim is another seasoned banker, having been part of the investment team at PE group RRJ Capital and the group chief financial officer of CIMB Investment Bank prior to that.
With this new set of board members coming from a banking and investment background, what’s in store for the asset-rich company?
One shareholder notes that more can be done to extract value from Pelikan.
“The stock continues to trade at a discount to its net tangible assets. Furthermore, while there were plans since 2016 for Pelikan to sell a stake in its European unit Pelikan AG, which would have raised a lot of cash for the Malaysian listed company, this has not happened. The company has also not declared a dividend in a long time, ” he says.
The history of Pelikan can be traced back to 2005. It was then known as Diperdana Holdings Bhd, which then acquired Pelikan Holding AG and Pelikan Japan KK. This saw the company transforming from a logistics player to a global stationery player. The Pelikan brand from Germany is more than 180 years old.
This was followed by the acquisition of another German-based stationery maker Herlitz AG in 2010.
But the global expansion by Pelikan has been tough for the company.
It reported losses from 2011 until 2015 before it returned to the black in 2016 after the company said it had completed a lengthy asset streamlining exercise.
That resulted in the Malaysian listed Pelikan becoming a holding company of Pelikan Holdings AG.
Things could be looking up
For the first nine months of the financial year ended Dec 31,2019, Pelikan posted a net profit of RM25.1mil, a 25% jump compared to RM20.85mil a year earlier.
It attributed the improvement to a cessation of its loss-making subsidiaries in Spain.
As at Sept 30,2019, Pelikan’s net asset per share stood at 76 sen, which is a 57% discount to its current share price of 33 sen apiece.
Its share price though has been on a decline in the last five years despite the efforts of the company to return to profitability.
This included the appointment of investment bank BNP Paribas in 2016 to look at “strategic options” for the company including selling at least a 20% stake in Pelikan AG.
This has not happened until today and debt remains a concern.
The company’s total debt is higher than its market capitalisation.
Pelikan’s assets include production plants in Germany, Mexico, Colombia and Poland. It has an international procurement centre in Malaysia.
As at Sept 30,2019, Pelikan was sitting on a total debt of RM411mil, out of which about 75% is made up of short-term borrowings.
The company has a market capitalisation of RM216mil.
Interestingly, following the board shake-up, Loo Hooi Keat, who is the CEO of Pelikan, has been nibbling at Pelikan shares from the open market since early December.
Loo, who is the second largest shareholder of Pelikan, bought some 336,500 shares in Pelikan, raising his direct stake to just above 10% from 9.95% previously. Loo has a 6.2% indirect stake in Pelikan.