Acquisitions
Anwar’s High-Stakes Gamble: The RM11 Billion Sunway-IJM Takeover Testing Malaysia’s Economic Divide
A blockbuster bid by billionaire Jeffrey Cheah’s Sunway Group to absorb construction giant IJM has ignited a ferocious debate about race, capital, and who really controls Malaysia’s economic future—just as the country edges toward a pivotal election cycle.
There are corporate deals, and then there are deals that hold up a mirror to an entire nation. The RM11 billion bid by Sunway Berhad for IJM Corporation is emphatically the latter. On the surface, it is a straightforward consolidation play in a sector long overdue for rationalisation. Dig a little deeper, and you find a collision of race politics, institutional shareholder power, and the ambitions of a prime minister still navigating the treacherous waters of multiracial governance.
When Sunway launched its takeover offer on January 12, 2026, valuing IJM at approximately RM11 billion—or around US$2.71 billion—the financial logic seemed sound. A combined entity would command a market capitalisation approaching RM50 billion, vaulting into the top ten on Bursa Malaysia and creating what proponents call a genuine national construction and property champion capable of competing regionally. But the weeks since have been anything but smooth, as bumiputera advocacy groups, opposition politicians, and state investment funds have raised uncomfortable questions about what this merger means for Malay economic ownership in a sector long considered strategically sensitive.
The Deal: What Is Actually on the Table
Sunway’s offer values each IJM share at roughly RM2.60, a premium of approximately 17 percent over IJM’s three-month volume-weighted average price prior to the announcement. IJM shareholders, many of whom have watched the stock languish for years amid rising input costs and a sluggish domestic construction pipeline, initially responded with cautious optimism. IJM’s share price surged past RM2.50 in the days following the announcement before settling into a holding pattern as political controversy deepened.
Sunway itself entered the year trading at a market capitalisation of roughly RM38 billion, buoyed by strong recurring income from its integrated townships and healthcare assets. The combined group would hold property, construction, infrastructure, and quarrying operations across Malaysia, India, the Middle East, and Australia—a conglomerate of genuine regional heft.
IJM also brings a balance sheet that makes the deal attractive beyond pure scale. With cash reserves exceeding RM2 billion and a healthy order book underpinned by ongoing infrastructure projects, it is not a distressed asset. That, paradoxically, has sharpened the controversy: critics ask why a profitable, bumiputera-linked institution should be absorbed into a group whose founder and controlling shareholder, Tan Sri Jeffrey Cheah, is an ethnic Chinese tycoon.
Jeffrey Cheah, Anwar Ibrahim, and the Racial Arithmetic
Few figures in Malaysian business carry the symbolic weight of Jeffrey Cheah. The founder of Sunway Group built his fortune from tin-mining wastelands in Selangor into one of the country’s most admired integrated townships, and has channelled hundreds of millions into education philanthropy through the Jeffrey Cheah Foundation. He is, by any measure, a Malaysian success story.
But success in Malaysia has always been read through a racial lens, and Cheah’s Chinese identity sits awkwardly against the backdrop of a deal that many bumiputera groups see as a dilution of Malay corporate ownership. IJM, while not a state-linked enterprise in the strictest sense, counts the Employees Provident Fund (EPF) and Permodalan Nasional Berhad (PNB)—two of the country’s largest state-backed institutional investors—among its most significant shareholders. Both funds carry an implicit mandate to protect and grow bumiputera wealth.
As reported by Bloomberg, the deal has drawn scrutiny precisely because it tests the limits of how far market logic can override the country’s affirmative ownership framework. PNB, which manages assets on behalf of bumiputera Malaysians, has not publicly declared its position. Its silence has been deafening.
For Prime Minister Anwar Ibrahim, the deal presents a political calculation of extraordinary delicacy. Anwar has staked much of his Madani economic agenda on attracting foreign investment, liberalising ownership rules, and projecting Malaysia as a modern, meritocratic economy. Approving a merger that creates a stronger, more competitive national champion aligns neatly with that narrative. But his political survival rests on a coalition that includes UMNO, whose grassroots remain deeply invested in the premise that bumiputera economic gains must be protected—sometimes at the expense of market efficiency.
UMNO Youth has been among the most vocal critics, with its leadership publicly questioning whether the government should allow what they characterise as a transfer of strategic assets from the bumiputera sphere to non-bumiputera control. The language has been incendiary in places, tapping into anxieties that predate the merger by decades but have found fresh urgency in an environment where Malay voter sentiment ahead of the 2026-2028 election cycle is increasingly volatile.
The Institutional Shareholders: EPF’s Quiet Power Play
Perhaps the most intriguing subplot involves the EPF. In the weeks following Sunway’s January announcement, market observers noted that the pension fund—which is the single largest institutional investor on Bursa Malaysia—had been quietly accumulating Sunway shares. As reported by The Edge Malaysia, EPF’s purchases were interpreted by some analysts as a signal that the fund was positioning itself to benefit from a deal it quietly endorses, while others read it as a hedge against the uncertainty a prolonged takeover battle creates.
The EPF’s dual role as a Sunway shareholder and an IJM shareholder creates an inherent tension. A higher offer price benefits its IJM position; a successful merger and subsequent re-rating of the combined entity would benefit its Sunway position. The fund’s leadership has maintained strict public silence, consistent with its fiduciary mandate, but the market is watching its every filing.
PNB presents a different profile. As the custodian of Amanah Saham Bumiputera (ASB) and related funds, it carries an explicitly race-conscious mandate that makes a straightforward commercial calculation more politically fraught. If PNB tenders its IJM shares to Sunway, it will face intense criticism from bumiputera advocacy groups regardless of the financial merit. If it withholds, it may be accused of undermining shareholder value for political reasons.
Regulatory Overhang: MACC and the Graft Question
Adding further turbulence, the Malaysian Anti-Corruption Commission (MACC) has been conducting investigations related to procurement irregularities in the construction sector—investigations that, while not directly targeted at either Sunway or IJM, have cast a shadow over the broader industry. Opposition politicians have not been slow to connect these investigations to the merger narrative, suggesting that a mega-consolidation could create opacity rather than accountability in public project awards.
These allegations remain unproven, and both Sunway and IJM have categorically denied any wrongdoing. But in the court of public opinion—particularly among Malay-majority voter blocs who are already sceptical of large Chinese-controlled conglomerates—the suggestion of graft, however tenuous, is politically potent.
The Financial Case: Why the Numbers Still Argue for Consolidation
Strip away the politics, and the economic logic for consolidation remains compelling.
Pre- and Post-Merger Snapshot (estimated, 2026):
| Metric | Sunway (standalone) | IJM (standalone) | Combined Entity (projected) |
|---|---|---|---|
| Market Cap | ~RM38 billion | ~RM11 billion | ~RM50 billion |
| Order Book | ~RM8 billion | ~RM12 billion | ~RM20 billion |
| Cash Reserves | ~RM3 billion | >RM2 billion | ~RM5+ billion |
| Bursa Ranking | Top 20 | Outside Top 20 | Top 10 |
| Regional Presence | MY, India, ME | MY, India, Australia | Significantly expanded |
Malaysia’s construction sector has been fragmented for too long. Dozens of mid-tier contractors compete for the same government contracts, undercutting margins and limiting investment in technology and sustainability. A combined Sunway-IJM entity would have the balance sheet to pursue large-scale infrastructure projects—including potential MRT extensions, Johor-Singapore Rapid Transit System works, and data centre construction—at a scale that smaller competitors cannot match.
As Reuters reported when the bid was announced, the merger is explicitly intended to create a “Malaysian building champion” capable of competing with regional giants from South Korea, Japan, and China that have long dominated Southeast Asian infrastructure. The argument is not merely financial; it is strategic.
Stakeholder Perspectives: A Divided Chorus
Institutional investors broadly favour the deal, citing synergy potential and the premium on offer. Foreign portfolio investors, in particular, have welcomed any signal that Malaysia is willing to allow market-driven consolidation over politically motivated intervention.
Bumiputera advocacy groups remain opposed, framing the merger as a symbolic retreat from the New Economic Policy’s goals of redistributive ownership. Their concern is less about Sunway’s competence than about the precedent: if EPF and PNB are seen to facilitate a transfer of a bumiputera-associated asset to a Chinese-controlled group, it emboldens similar deals in other sectors.
Industry executives, speaking privately, tend to regard the political opposition as short-sighted. One senior figure in the construction supply chain, speaking on condition of anonymity, described the fragmentation of the sector as “a luxury we can no longer afford” given the scale of infrastructure investment required to sustain Malaysia’s economic development targets.
Opposition politicians, from both the right and left flanks, have found unlikely common cause in scrutinising the deal—though for very different reasons. Perikatan Nasional has leaned into the bumiputera ownership argument; Parti Sosialis Malaysia has questioned the concentration of market power.
The Political Clock: 2026 and Beyond
The offer closes on April 6, 2026. That date matters enormously. Malaysia’s next general election is constitutionally due by 2028, but the political calendar is fluid; state elections and the underlying fragility of Anwar’s coalition mean that every major policy decision carries electoral freight.
A government that approves or tacitly facilitates this merger risks alienating a segment of the Malay electorate that sees bumiputera corporate ownership as non-negotiable. A government that blocks or delays it risks signalling to international capital that Malaysia remains a prisoner of ethnic economic politics—precisely the image Anwar has worked to overcome since taking office.
As Channel News Asia noted in its coverage, the controversy has exposed a fault line in Malaysia’s economic governance that no amount of Madani branding fully papers over: the tension between a market-oriented economic vision and the redistributive commitments baked into the country’s political DNA.
Three Scenarios for What Comes Next
Scenario One: The Deal Proceeds, Largely Intact. EPF and PNB tender their shares, the offer closes on schedule in April, and the combined entity lists as one of Bursa’s largest companies. Politically, Anwar absorbs short-term criticism from UMNO backbenchers but points to the resulting national champion as evidence of his economic competence. Markets respond positively.
Scenario Two: A Revised Offer with Bumiputera Conditions. Under pressure from state funds and the government, Sunway sweetens the deal—either by raising the offer price or by committing to structural conditions such as a minimum bumiputera board representation, a ring-fenced bumiputera vendor programme, or a stake reserved for PNB in the combined entity. This is the most politically elegant outcome, though it sets a precedent for race-conditioned M&A that will unsettle foreign investors.
Scenario Three: The Deal Collapses. State funds decline to tender, Sunway fails to achieve the thresholds required for compulsory acquisition, and IJM remains independent. The immediate market reaction would be negative for both stocks. More significantly, it would signal to the region that Malaysia’s affirmative ownership framework remains a structural constraint on market-driven consolidation—a message with long-term consequences for capital allocation.
The Bigger Picture
What makes the Sunway-IJM saga so revealing is not the deal itself but the anxieties it has brought to the surface. Malaysia’s economy has long operated on an implicit bargain: Chinese capital provides commercial dynamism; bumiputera institutions provide political legitimacy; and the government manages the intersection between the two. That bargain is under strain, not because any one actor has behaved badly, but because the world has changed around it.
Regional competition is intensifying. Infrastructure capital is flowing to markets with clearer rules. And a generation of Malaysian investors—bumiputera and otherwise—is increasingly asking whether the inherited framework serves their financial interests or merely their symbolic ones.
The answer Anwar and his government provide in the coming weeks, whether through action or studied inaction, will echo well beyond the construction sector. It will say something fundamental about whether Malaysia is prepared to let economic logic lead—and whether, in the year 2026, it can afford the luxury of letting politics decide.
The offer period for Sunway’s takeover bid for IJM Corporation closes April 6, 2026. Regulatory and shareholder decisions in the intervening weeks will determine whether Malaysia’s most politically charged corporate deal in years reshapes the country’s economic landscape—or exposes the limits of its reform ambitions.