Employees Provident Fund (EPF) is buying a 49 per cent stake in OSK Holdings Bhd’s Australian project Yarra Park City for $115.9 million, the first overseas property investment by the Malaysian pension fund this year.
OSK’s Yarra Park City holds the rights to a five-acre, mixed-use development Melbourne Square in Southbank, Melbourne and has a gross development value of over $2.1 billion. PJ Development Holdings, a subsidiary of OSK will hold the rest of 51 per cent in the development.
“With the Disposal and Yarra Park Subscription, it provides an opportunity for OSKH to partner EPF to undertake a large-scale iconic mixed-use development in Melbourne, Australia which is one of the finest and most vibrant cities in the world, having also been ranked as the world’s most livable city,” OSK said in a filing at Bursa Malaysia on Thursday.
The stake sale by OSK is expected to increase its net earnings by $28.7 (AUD38.2 million) and a foreign exchange gain on the total investment in Yarra Park, it said in its exchange filing.
“The Melbourne property development befits EPF’s long-term objectives and will be a good addition to our overseas portfolio. The increasing demand for residential [property] in Melbourne will enable EPF to generate returns for its members,” said EPF CEO Datuk Shahril Ridza Ridzua in a statement on Thursday.
Melbourne Square will be EPF’s second overseas development project after Battersea Power Station project in London. The consortium developing the Battersea Power Station project includes Sime Darby Bhd and S P Setia Bhd while EPF hold a 20 per cent stake in the project.
Earlier this year, EPF decided the sale of atleast three London properties and it was also reported that it was mulling a sale of office property in Australia which was expected to sell for around $225.9 million (AUD300 million).
Meanwhile, EPF has plans to to invest more in private equity, property and infrastructure, Shahril had said in September last year. In fact, the pension fund wants the investments in these segments to reach about 10 per cent of total assets as compared to 6 per cent at that time.