Khazanah’s New Fiasco?

Not too long after it was reported that Khazanah Nasional Bhd sold Iskandar Malaysia Studios (IMS) for pennies on the dollar, it appears that the same circumstances apply to the sovereign wealth fund’s investment in Kidzania.

Theme park operator Sim Leisure Group (SLG) recently acquired Kidzania Singapore after the children’s theme park went into liquidation in the city-state. SLG obtained all of its non-movable assets from receivers for a mere SG$110,000 (RM379,398).

Source: https://www.thevibes.com

Khazanah and Boustead Holdings Bhd, which launched Kidzania in Singapore in 2016, initially injected SG$48 million (RM165.52 million) into the project. Poor management of the theme park by Khazanah saw it record SG$15 million (RM51.73 million) in revenue and SG$8.3 million (RM28.63 million) in losses after tax, according to a Singapore Business Times report. Further, Kidzania Singapore also owed SG$53.4 million (RM184.17 million) to creditors, with as much as 93% of the debt owed to Theme Attractions Resorts & Hotels Sdn Bhd (TARH), a subsidiary of Khazanah.

TARH owns an 80% stake in Rakan Riang Pte Ltd (Rakan Riang Singapore), which operates Kidzania through a joint venture with Boustead Curve – a subsidiary of Bousted Holdings. Rakan Riang Singapore has a paid-up capital of SG$24 million (RM82.78 million) in ordinary and preference shares. It also showed that Rakan Riang Singapore’s total assets in 2017, which were valued at SG$50 million, depreciated to SG$6.578 million in 2019. By the end of 2019, the company had recorded a total of SG$87.839 million in recorded losses.

Based on the shareholder structure alone, it is believed that Khazanah, through TARH, injected at least SG$4.512 million into Rakan Riang Singapore, while Bousted contributed at least SG$1.128 million. Further, there are also three charges attached to the company, which have already been satisfied, with the chargee being Malayan Banking Bhd. It is believed that Khazanah, perhaps through its subsidiaries, obtained a loan with an estimated worth of SG$25 million with regard to its Kidzania Singapore investment.

However, this failed investment venture by Khazanah is not limited to its activities in Singapore; it appears the same circumstances apply to the Kidzania theme park in Malaysia, which was also purchased by Sim Leisure Group in 2020. TARH sold its 24.48 million shares to Sim Leisure Escape Sdn Bhd in 2021. Although it was reported that the Sim Leisure Group acquired Kidzania Malaysia for RM3.8 million, it is believed that this project, which involved Khazanah and Boustead Holdings, required an initial injection of RM90 million for construction and pre-operating costs. Kidzania Malaysia, which was operated by Rakan Riang Sdn Bhd (Rakan Riang Malaysia), also received a RM26 million loan from CIMB, which was fully satisfied in 2016.

Could Khazanah have leased out the operations of the theme park to other companies instead of selling it outright or going into receivership?

According to a report by South China Morning Post, by the close of 2022, Kidzania Malaysia, which never made any money under its former management – had brought in RM6.46 million in profits for its new owners. Meanwhile, according to reports, the Sim Leisure Group plans to refurbish Kidzania Singapore on Sentosa Island and begin operations by the first quarter of 2024.

The Malaysian-grown Sim Leisure Group, which is also listed on the Singaporean stock exchange, is in fact one of the world’s leading theme park developers, with Escape Penang, Kidzania, the John Wick ride in Dubai, and Six Flags Saudi Arabia among the 300 projects under their belt.

Why does Khazanah invest in a project with public funds and divest at a very low price, taking losses as a result? Why can’t they examine some serious options without any further funds injected? We have the best “brains” in Khazanah and this is the result? Will any “heads roll”? Please don’t hold your breath!

Reference:

Khazanah’s RM165 mil Kidzania S’pore sells for RM370,000, The Vibes, 16 June 2023