Malaysian pension fund EPF to exit investment in Columbia Asia

EPF chairman
Tan Sri Samsudin Osman, Chairman, EPF

Malaysia’s Employees Provident Fund (EPF) is exiting its investment in healthcare services provider Columbia Asia Sdn Bhd (CASB) this month.

In its 2017 annual report, the pension fund said it is reclassifying the investment in CASB as assets held for sale. EPF holds a 29.72 per cent stake in the firm.

“EPF has also reclassified the cost of investment in Columbia Asia Sdn Bhd by RM203.21 million from investment in associates to assets held-for-sale. This is due to the decision of the Investment Panel which has approved the sale proposal of Columbia Asia Sdn Bhd on November 6, 2017 and the sale is expected to be completed by April 2018,” it noted in its annual report.

Columbia Asia Group is buying the stake from EPF to increase its holding in subsidiary CASB to 99.12 per cent, a spokesperson for the former confirmed. The hospital group, owned by International Columbia US, LLC and part of Seattle-based Columbia Pacific Management, has 29 hospitals and two clinics across Malaysia, India, Indonesia, Vietnam and Kenya.

In March this year, it announced raising an additional equity investment of $210 million, primarily from its existing shareholders. About $140 million of this investment came from Tokyo-based Mitsui & Co., Ltd., an existing equity shareholder in Columbia Asia. Mitsui had in 2016 invested $101 million in the company.

Columbia Asia is not the only asset being divested by EPF. The pension fund plans to sell 38 units of investment properties of CIMB and a property at Petra Jaya, Sarawak. All these assets held for sale are expected to be disposed of this year. EPF said the fair value of all these assets, including its investment in Columbia Asia, is RM592.10 million ($152.56 million).

EPF’s total investment assets at the end of 2017 stood at RM791.48 billion ($203.9 billion), while its gross investment income for the year was RM53.14 billion ($13.7 billion), according to its annual report. It recorded a gross return on investment of 7.3 per cent.

EPF said it further wants to diversify its portfolio by increasing its global investments this year. The pension fund’s global assets, while constituting only 28 per cent of total assets, contributed more than 40 per cent of its gross investment income in 2017.

“We target to expand our global portfolio to 32 per cent in 2018, from 28 per cent in 2017 as part of our ongoing efforts to ensure appropriate diversification and risk management of our total portfolio,” EPF chief executive Shahril Ridza Ridzuan wrote in the annual report.

The pension fund is also gearing up for some uncertainty in the near term due to political events. “We anticipate that 2018 will be an eventful year as Malaysia gears up for the upcoming 14th General Election. Political events will no doubt take centre stage, though they tend to have a short term effect on the markets. As a retirement fund, our focus will be for the long term, driven by microeconomic factors. We remain committed to our long-term investment strategy, and will invest only in assets that are able to provide a steady and consistent stream of income,”  EPF chairman Samsudin Osman noted in the annual report.