A screenshot of the Platinum Partners fund’s website.KUALA LUMPUR, Nov 3 — In tracing the sudden collapse of the shares of three listed Singapore-based companies with reported Malaysian links, The Edge cast a spotlight on US hedge fund Platinum Partners Value Arbitrage Fund’s role had in inflating share prices beyond their value.
According to The Edge, Platinum Partners was initially poised to pay hundreds of millions in dollars for new shares in the three firms – investment firm Asiasons Capital, gold miner LionGold Corp Ltd and natural resources investment company Blumont Group Ltd – which would have bumped up investors’ confidence and potentially yield hefty profits.
But the deals fell through after the October 4 share collapse, which saw Singapore’s market regulator stepping in to briefly suspend trading of the three’s shares and classifying them as designated shares with strict trading conditions.
“Collectively, therefore, Platinum Partners would have invested up to US$560 million (RM1.8 billion) in Asiasons, Blumont and LionGold. This would represent more than half of its assets of US$1 billion. That appears to be a hefty bet on the three companies.
“The injection of fresh funds into the three companies by Platinum Partners are supposed to be monies for more acquisitions, which would perpetuate the positive sentiment surrounding their stocks, instilling greater investor confidence and, in turn, likely push their share prices even higher,” the financial weekly said.
“Such acquisitions over the past two years have had magnified impact on LionGold and Blumont’s share prices and more recently, that of Asiasons, well beyond the actual investment amounts.
“The ‘well-laid’ plans were scuttled by the collapse in the share prices of the three companies on Oct 4,” The Edge added.
In analysing how the suprise share collapse had happened, The Edge listed down a series of events including short-selling of shares in all three firms; share-selling by an insider at Blumont and LionGold; shareholders getting wind of the risk that share prices will eventually drop as more shares continued to be issued, as well as the dumping of shares on October 4.
The Edge suggested that all these events had then triggered the price collapse on October 4.
“Firstly, the build-up in short-selling activity preceding the collapse not only capped the share price but also absorbed most of the market’s buying interest in the three companies, especially after the huge gains seen in September.
“Secondly, savvy investors might have noticed this and decided to either cash out or stay out of the game. It dawned on the market that the fundamentals of the three companies cannot back up the astronomical gains,” it said.
On Monday, international news agency Reuters reported that the three firms – whose shares’ values dropped by S$5 billion (RM12.7 billion) in under one hour of trading – were all linked through an intricate network of influential businessmen in Malaysia.
Basing it on public filings and the latest annual reports available, Reuters said Asiasons was the largest shareholder in LionGold.
Among those named by Reuters was Asiasons’ co-founder and chairman Mohammad Azlan Hashim, who is currently a director of Malaysian investment arm Khazanah Nasional and formerly the executive chairman of the Kuala Lumpur Stock Exchange.
One of LionGold’s non-executive director is Datuk Wira Dani Daim – the son of Malaysia’s former finance minister Tun Daim Zainuddin – who remains a major shareholder after recently trimmed his 6.35 stake in the company to a 4.62 stake.
Lynne Ng Su Ling is an independent director in both LionGold and Blumont, Reuters said.