Proton stake sold by Khazanah to DRB-Hicom

Malaysia's state-owned investment firm Khazanah has sold its stake in carmaker Proton in one of the biggest deals in the country's auto sector. Khazanah offloaded its 42.7% stake in for 1.29bn ringgit ($410m; £269m) to DRB-Hicom. DRB, owned by billionaire Syed Mokhtar Al-Bukhary, will have to make a mandatory offer for the remaining shares. DRB already assembles vehicles for Volkswagen and Mercedes Benz. "DRB-Hicom's proposal also demonstrated the company's extensive involvement in the automotive sector and its network of strategic partnerships, both local and international," Khazanah said in a statement. "DRB-Hicom's proposed strategy and business plan provides an effective platform to enhance Proton's sustainability and meet its long-term growth needs." The deal comes at a time when Proton has been struggling to keep hold of its dominance in Malaysia. It has seen its market share fall to 30% from more than 60% five years ago The carmaker has been trying to tie up with various international manufacturers in the past few years in an attempt to regain its hold. There have been talks of proposed tie-ups with Volkswagen and General Motors. However, none of those have materialised into a formal partnership. Analysts said the deal with DRB, which has experience in the sector, will bode well for Proton, as the former was expected to inject cash and boost production numbers at Proton's plants. "It's a fair deal. It bodes well and will open new doors for Proton," said Ahmad Maghfur of OSK Research. "For DRB-Hicom, it will mean short-term pain for long-term gain." The sale is the latest in a series of divestments that Khazanah has undertaken in recent years. The investment firm has also offloaded its stake in Pos Malaysia Berhad and Time dotCom Berhad. The company said it had been divesting controlling stakes in businesses that it sees as non-core and non-competitive assets. Khazanah's managing director, Azman Haji Mokhtar, said the Proton deal was "another significant milestone in our strategic divestment programme as it represents the largest in size to date". Mr Mokhtar added that the divestments were aimed at making government-linked companies become "stronger and more competitive".