UPDATE 1-Malaysia's Khazanah places Tenaga shares-dealers

By Soo Ai Peng

KUALA LUMPUR, Dec 11 (Reuters) - Malaysia's state fund Khazanah cut its stake in national power utility Tenaga via a share placement following the prime minister's call to cut down its interests in government-linked firms to create liquidity in its laggard market.

The Malaysian market's low level of free float is one of the reasons for its underperformance relative to other emerging markets that have seen a flood of money.

Malaysia's benchmark stock index has risen 43.7 percent this year compared with Thailand's index which has gained 54.4 percent, Indonesia's which has risen 83.5 percent and Singapore's benchmark, up 57.9 percent.

Khazanah raised 704.7 million ringgit ($207.5 million) after placing out this week about 87 million shares in Tenaga, the country's largest power firm, dealers said on Friday.

Khazanah's shares, which account for about 2 percent of Tenaga's total share capital, were sold at 8.10 ringgit a share, the dealers said.

The placement is part of the state fund's plan to cut its ownership in government-linked companies (GLCs) to raise market liquidity in these companies and create a more vibrant stock market, the dealers said.

A Khazanah spokesman declined to comment on the matter.

As of Aug.31, 2009, Khazanah owned about 1.64 billion shares or 38 percent of Tenaga, according to Tenaga's website (www.tnb.com.my).

Tenaga is the largest power firm in the country, generating more than two-thirds of the country's electricity supply.

By 0147 GMT, Tenaga shares were down 0.12 percent at 8.39 ringgit a share. The stock has gained 34.4 percent so far in 2009, lagging the wider market's 43.7 percent rise.

Prime Minister Najib Razak, who introduced a raft of market liberalisation measures since taking office in April, has asked Khazanah to address the low level of free-float in the local stock market by cutting down its stakes in government-linked firms.

Najib also asked for the listing of Malaysia's top mobile provider by market share Maxis which launched its $3.3 billion IPO in a strong market debut.

Khazanah, owned by Malaysia's Finance Ministry, controls some of the largest companies on the stock exchange.

Khazanah owns more than 50 percent of flag carrier Malaysian Airline System and Malaysia Airports Holdings

It also controls No.2 lender CIMB, mobile provider Axiata, highway operator PLUS Expressways and national carmaker Proton. (Reporting by Soo Ai Peng; Editing by David Chance and Valerie Lee) (([e-mail]; Reuters Messaging:[e-mail]; [phone])) Keywords: TENAGA/ (If you have a comment or query on this story, send an email to [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.