KUALA LUMPUR -- The Singapore government has bought a 5 percent stake in Malaysian state-controlled car maker Proton Holdings Bhd. in a deal worth about $65 million, extending a series of cross-border investments.
The purchase by the Government of Singapore Investment Corp. Pte Ltd. (GIC), a state investment firm that manages Singapore's foreign reserves, marked its first stake in Malaysia's largest car maker and followed the agency's acquisition of 5 percent of Malaysia's Shell Refining Co. in July.
"The GIC acts like a portfolio manager with a relatively short-term view. So it seems like there was an opportunity, and they snapped it up," said a Singapore-based analyst at a European investment firm who declined to be identified.
The investments by the GIC and other Singapore state agencies follow a rise in ministerial-level contacts between the neighbors since last year, when Abdullah Ahmad Badawi replaced veteran Malaysian leader Mahathir Mohamad.
Proton, which dominates about half the Malaysian car market, said in a statement late on Tuesday the GIC bought 27.6 million shares, or 5.04 percent, at an undisclosed price.
At Tuesday's closing price of 9 ringgit, the deal would be worth 248 million ringgit ($65 million).
SPECULATION OVER MITSUBISHI, VW
Proton said the deal was done on Nov. 9, the day Japan's biggest trading house, Mitsubishi Corp., said it was not looking to sell its stake in Proton after the Malaysian firm's move to link up with Germany's Volkswagen AG.
Mitsubishi Corp., a founding member of the Proton project to develop a Malaysian car-making industry, owns 7.93 percent of Proton. The Malaysian government owns 45 percent.
Speculation about the future of Mitsubishi's stake resurfaced late last month when Proton struck a deal to assemble Volkswagen cars in Malaysia for sale in Southeast Asia.
Volkswagen did not take an equity stake in Proton under the deal, but industry analysts said this may follow. Under the pact, the first Malaysian-assembled VW models would be launched by the end of next year, generating sales of over 15,000 units in 2006.
The GIC, which holds a wide range of mainly blue chip assets from Japanese and Korean real estate projects to U.S. bonds and equities, had no comment.