Malaysia’s EPF has war chest for domestic deals

EPF CEO Shahril Ridza Ridzuan

Malaysian pension fund, the Employees Provident Fund (EPF) is interested to increase its investments in infrastructure and real estate sectors locally, relying on its steady net inflow of contributions from members to cover the its domestic investment requirement.

EPF’s net inflow of contributions amounts to almost MYR16 billion a year, which it said is more than sufficient to pursue local investments. It added that it is in no hurry to sell overseas assets for cash.

“We have a constant flow of net contributions coming into the EPF on a monthly basis, so we continue to invest very heavily in the Malaysian market from this together with income generated from our domestic assets. We do not have shortage of money for investments in Malaysia,” chief executive officer Shahril Ridza Ridzuan said at a media briefing at the launch of the 2015 annual report.

He added that the fund continues to seek investment opportunities, mostly long term, infrastructure-linked investments in the areas of utility, highways, waste management and energy. “We’ve been big investors in power plants, toll highways, and other infrastructure projects in Malaysia that provide that inflation-adjusted returns.”

The fund is looking forward to a better performing local market, compared to 2015.

“We will probably see in 2016, a reversal of what we did in 2015. This year, we are hoping there will be a pick-up in domestic performance and hope that that will make up for some of the shortfalls we have seen in the global markets,” Ridzuan said.

Aside from infrastructure, the fund continues to keep its eyes peeled on the industrial property sector, in which it has explored deals in the UK and Australia.

“If you look at the property market, we are interested in the logistics space. We tend to like this (sector), as these are simple brick-and-mortar businesses, with very long tenancies and leases that we intend to put in place. We have brought in partners from Europe and Australia to work with us in Malaysia and Asean to invest here,” he said.

He added that EPF believes that industrial property, with an element of logistics, is one growth area against the backdrop of the Malaysian economy transforming into an internet-based economy, towards deliveries as opposed to traditional retail and office space.

EPF annual report 2015 assets

The 2015 annual report showed a gross contribution to EPF amounting to MYR59.98 billion, but this was offset by withdrawals of MYR44.25 billion.

In total, the pension fund manages MYR684.5 billion worth of investment assets as at end-2015.

Exposure to 1MDB bond

On its exposure to the 1Malaysia Development Bhd’s (1MDB) MYR5 billion sukuk (Islamic bond), EPF said it has yet to decide to call for an early redemption of its investment as the trustees for 1MDB’s sukuk had not given any notice to the provident fund on whether there had been a cross default on Islamic bonds.

“We’ll just have to wait and see if the trustees deem that there’s a cross default and whether they have to bring the matter to bondholders. At this point, there’s nothing so far,” Shahril told the media yesterday after the release of the EPF’s annual report for 2015.

According to him, the EPF does not have significant exposure. It has invested RM200 million in the sukuk.

“Our exposure to 1MDB is very limited. We have MYR200 million out of the first MYR5 billion issuance when it was still known as the Terengganu Investment Authority. That exposure is fully government-guaranteed. We don’t have a problem with it and we’ve never had an issue in terms of the servicing of payments by 1MDB,” he said, noting that the EPF is monitoring the current developments surrounding 1MDB.

Also read:

Malaysia’s EPF outsources $25.2b to external fund managers in 2015

EPF to hike investments in real estate, infra & private equity in five years

Malaysia’s EPF declares 6.4% dividend, total payout of $9b

Malaysia’s EPF to launch $29.3b shariah-compliant fund by Jan 2017

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.