Rosmah's Deepak exits share market amid talk of Dr M displeasure

Deepak Jaikishan, most famous for his denial of being First Lady Rosmah Mansor's toy boy, shocked the stock market by selling his entire stake in oil-and-gas wannabe Envair Holding Bhd.

His sudden and full exit, after a public assurance he was in for the long haul, lent credence to speculation that there had been objections from the highest quarters of Umno to Prime Minister Najib Razak's family entering the O&G sector on the coat-tails of national petroleum firm Petronas.

"There is talk Mahathir is not happy. Firstly, he doesn't want to share the Petronas goodies but apparently, his people also say he doesn't think Najib deserves any government contract from Petronas," an investment manager at a local stock broking firm told Malaysia Chronicle.

Promised to stay for the long haul

The families of former premiers Mahathir Mohamad and Abdullah Badawi are both involved in the sector through Kencana and Scomi respectively, with Petronas contracts forming the bulwark of revenue generators for both firms . Given Malaysia's worsening record on the world corruption indices, Najib's perceived entry into the O&G world via Deepak had raised eyebrows.

Deepak's entry into Malaysia's corporate world had also been frowned upon amid fears that it would bring scandal of the Altantuya Shaariibuu murder and Scorpene submarines kickback into Malaysia's corporate world. Najib, Rosmah and Deepak, who have been implicated in the murder, have denied involvement.

“I have, by announcing my stake in Envair, decided to be part of this new business (oil and gas) and over the next few months, combine our strengths, to build the business further," Deepak had told the press earlier this month.

“I aim to be part of this thriving company's executive board and management. I hereby reiterate that I will not be selling down my stake in the future and, instead, hope to build it up in the days ahead.

A manufacturer of air and water filters, Envair had last month surprised the market by entering the O&G sector, after signing a joint marketing agreement with Resscom, which has a licence from Petronas to procure diesel and other oil and gas products.

Envair even assured investors that it could supply two million barrels of light crude oil monthly for 60 months to a China-based company, An Hong Shenzhen. It is unclear if Deepak's withdrawal three weeks after buying in would sink these high ambitions.

RM750,000 profit enough for Deepak?

However, Deepak's U-turn sank Envair shares, which suffered their steepest decline in more than a month, falling more than 15 per cent to an intraday low of 26.5 sen on Thursday. It was its fourth consecutive day of decline. It was traded 39.5 sen early this week.

Envair trading volume has also reduced significantly, making it tough for the retailers to exit their purchases without incurring losses. This week, its average trading volume was about 12.5 million shares, more than 60 per cent lower than the average of 31.44 million shares previously.

Filings to Bursa Malaysia on Wednesday showed that Deepak had sold six million shares on December 14 in the open market. On the day of the disposal, Envair shares were traded between 34.5 sen and 38 sen. Deepak did not inform Bursa Malaysia on why he sold the stakes. This means Deepak could have make at least 56 per cent return on investment (ROI), or a minimum of RM750,000.

"For someone like Deepak, RM750,000 is small change. It is highly unlikely he went in, caused so much noise and then sell down for such sesame seed profit," the investment manager said.

Deepak had bought the six million shares on December 2 for RM1.32 million or 22 sen each, declaring that he would soon raise his stake to more than 10 per cent.

Indeed, he is known to have deep enough pockets to mix with the Rosmah crowd of socialites and hangers-on. Deepak runs a family-owned carpet shop in downtown Kuala Lumpur and was accused of offering and funding a RM5 million bribe to private investigator P Balasubramaniam to retract a statutory declaration implicating Najib in the Altantuya-Scorpenes case.

Najib's son Nazifuddin's entry into Harvest

According to Business Times, Deepak is not the first investor who bought a substantial stake in Envair, only to dispose of it shortly after. On November 1, Chinese national Jiang Chuan Yi bought 6.75 per cent in the company, only to dispose of the entire stake three weeks later.

Deepak's Envair venture had come hot on the heels of another penny-stock counter related to Najib's family - Harvest Court Industries Bhd. Speculation had swirled that the Harvest and Envair deals were either to reap personal gains or to build a war chest for general elections which Najib is widely expected to call in 2012.

Shares in Harvest rocketed to a 9-year-high on news that Najib's 28-year-old son Nazifuddin had joined the board and taken a stake in the firm. In the wake of the market commotion, Nazifuddin quit the Harvest board but pledged to hold onto his stake for the long term. Just like Deepak had done so for Envair!

Malaysia Chronicle