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Khazanah, Malaysia’s state-owned investment firm, has sold its stake in car manufacturer Proton for 1.29bn ringgit (GBP 269 million), in what is one of the largest automotive deals ever seen in the country.

The 42.7% stake has been sold to DRB-Hicom, a firm owned by billionaire Syed Mokhtar Al-Bukhary. He must make a mandatory offer on the remaining shares.

Proton has seen its market share dwindle in recent years, dropping from 60% of the Malaysian car market to just 30% in five years. Analysts say that the deal will provide Proton with a new lease of life, since DRB – which already assembles cars for Volkswagen and Mercedez Benz – has extensive experience in the car manufacturing business.

While the Proton is considered by most to be a reliable car – not one that should require its car breakdown cover to be called upon too frequently –it nevertheless has not made inroads into European and US markets in the way it used to. The emerging markets (many would say big enough to be labelled ‘emerged’) of China and India will also be of primary interest to the Malaysian auto maker as it moves forward.

Khazanah is looking to divest itself of assets that are “non-core” and “non-competitive”, as it looks to ensure key Malaysian companies are able to compete effectively and efficiently on a global scale. The Proton divestment will be Khazanah’s largest sale of one of its assets.