The independence and credibility of RAM Holdings is in question following the green light from the Securities Commission (SC) for the acquisition of the credit rating firm by CTOS Digital Bhd.
CTOS Digital, which is linked to Creador, a multibillion private equity firm owned by Brahmal Vasudevan, was given approval by the SC to acquire a more than 51% stake in RAM. RAM was established by Bank Negara Malaysia in 1990 to support the local debt capital market.
RAM is the industry leader in credit ratings. Its credit opinions have become a crucial reference for banks as well as financial regulators. RAM’s constitution bars any individual stakeholder from owning more than 20% of shares in the company. But this can be overcome - RAM’s recent AGM has already approved it.
CTOS currently holds 11.52% paid-up capital in RAM, which will be increased to 19.25% “pending completion of administrative steps”, according to a request from CTOS.
Some pointed out the “gradual subversion of RAM” over the years, saying non-banking as well as foreign entities were among more than a dozen shareholders in the agency. Adding to the fear is the potential conflict of interest of individuals in CTOS.
Why is BNM exceptionally quiet on this? And why is the SC favourable to the move? RAM can become a tool for some individual interests and how will CTOS ensure its independence and reduced conflicts of interest? How are employees treated? Who gains in this transaction? The banks? BNM? SC? Why can’t we have an independent adviser’s opinion and recommendation on price and other issues?
Reference:
Storm brewing in Malaysian debt capital market as new entity set to take control of RAM rating agency, Malaysia Now, 3 June 2022
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