Malaysia’s Khazanah unveils refreshed mandate after a weak 2018

Malaysia’s $39-billion sovereign wealth fund Khazanah Nasional Bhd on Tuesday announced a refreshed mandate to grow the country’s long-term wealth amidst an ongoing restructuring.

The new mandate will see the sovereign wealth fund classify its assets into separate commercial and strategic funds.

The commercial fund is an intergenerational wealth fund to meet Khazanah’s commercial objective and has a target return of Malaysian Consumer Price Index of plus 3 per cent on a five-year rolling basis. This fund includes public assets such as CIMB Group, Axiata Group, IHH Healthcare and Alibaba.com; and private assets such as The Holstein Milk Company, Sun Life Malaysia, WeLab and Palantir.

Meanwhile, the strategic fund targets a return of 10-year Malaysian Government Securities yield on a five-year rolling basis and measurable economic benefits.

This fund includes strategic assets such as Telekom Malaysia, Tenaga Nasional, Malaysia Airlines, Malaysia Airports and PLUS Malaysia; and developmental assets such as Silterra, Iskandar Investment Berhad, Themed Attractions Resort & Hotels, Pinewood Iskandar Malaysia Studios and Medini Iskandar Malaysia.

“Our performance in 2018 was impacted by several key global and domestic developments in both the economic and social spheres. At the same time, the government initiated a reset of Khazanah, which involved significant changes including a refreshed mandate.

“The organisational restructuring we are currently undertaking will enable us to execute and deliver on our role of growing Malaysia’s long-term wealth, beginning from this year,” said Khazanah managing director Shahril Ridza Ridzuan.

For 2019, Khazanah will focus on executing its portfolio rebalancing strategy and strengthening its financial position.

As of December 31, 2018, Khazanah’s portfolio value as measured by its net worth adjusted (NWA) declined to RM91 billion ($22.3 billion), a 21.6 per cent drop from the previous year. Its realisable asset value also declined to RM136 billion ($33.3 billion) from RM157 billion ($38.5 billion) during the same period. The long-term portfolio performance remained on an upward trajectory, with its NWA achieving an 11.0 per cent return per annum over the last 10 years.

In 2018, Khazanah recorded a loss before tax of RM6.27 billion ($1.54 billion), compared to a profit before tax of RM2.89 billion ($710 million) a year earlier. Profitability was affected due to fewer divestments, reduced dividend income and higher impairments, during a period of transition for Khazanah in an unfavourable market, the SWF said. It declared a dividend of RM1.5 billion ($367 million) for 2018.

Last year was an eventful one for the sovereign wealth fund after the country voted former prime minister Najib Razak’s government out of office. Khazanah has since undergone a major management shakeup to restructure the country’s assets to pare national debt.

One of the large divestments made by Khazanah last year was the sale of its 16 per cent stake in Malaysia-based healthcare group IHH Healthcare Bhd to Japan’s Mitsui & Co. Ltd for $2 billion in cash. The divestment is expected to be completed this quarter.

Some notable investments by Khazanah last year included the acquisition of Prince Court Medical Centre, as well as investments into Ping An Good Doctor and Alibaba’s Ant Financial.

Also Read:

Malaysia’s Khazanah to declare $240m dividend payout for 2019

Malaysia’s Khazanah looks to reset strategy to replenish govt coffers

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. 
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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.