The move by the Employees Provident Fund (EPF) to jointly acquire PLUS Expressways Bhd with the UEM Group Bhd is seen as an excellent investment deal and a good exit for minority shareholders of the company.

Analysts and economists have come out in support of the joint bid, via a special purpose vehicle to buy PLUS at RM4.60 per share and is tied in with the budget day announcement on the capping of toll rates, for the next five years.

The offer price represents a 21.4 per cent premium over a six-month volume weighted average price of PLUS shares.

AmResearch analyst Hoy Ken Mark said PLUS has been an excellent dividend-paying stock over the years, with an annual yield of four to five per cent and will be among the significant revenue contributors to EPF.

The co-investment vehicle will see the EPF having a 49 per cent stake in PLUS while the UEM Group holds the balance.

'With a steady traffic volume, PLUS is expected to generate about six per cent returns annually and this figure is adequate for EPF.

'But the EPF-UEM pact will have to first restructure the toll operator's debt to match its cash flow,' said Datuk Salleh Majid, a former president of the Kuala Lumpur Stock Exchange (KLSE) said.

Although there were already two well publicised offers to take over PLUS, each promising to reduce toll charges, the joint acquisition by EPF and the UEM Group simply means, both parties would gain substantially from the deal.

'EPF's proposed 49 per cent stake in PLUS will of course generate returns for its 12 million members.

'However, I think the benefits of this takeover should also be extended to PLUS users in the form of lower toll charges,' said Datuk Seri Shahrir Abdul Samad, a former cabinet minister and Johor Bahru Member of Parliament.

While others pointed out that the EPF may see higher returns should it invest overseas, Tan Sri Ramon Navaratnam, chairman of the ASLI Centre for Public Policy Studies, took a different view.

'As EPF has always been aggressively exploring the local market, this proposed joint acquisition of PLUS, is an excellent investment in the sense that it is a mature and cash generating asset, with an attractive risk-return profile.

'This matches EPF's investment portfolio,' said Navaratnam.

As part of its plan to optimise returns and improve its risk-return profile, EPF has started to diversify its investment portfolio while looking for opportunities abroad.

It started off the overseas initiative with a RM4.88 billion venture into the property sector in the United Kingdom in August.

As at March 31, EPF's total fund size was estimated to be at RM402 billion, most of which are invested in bonds and equities, locally.

At present, the UEM Group, together with its parent company, Khazanah Nasional Bhd, holds a 55.4 per cent stake in PLUS.

The EPF in turn, has a 12.3 per cent share in the biggest toll operator in South East Asia. -- Bernama