CLICK TO ENLARGE

       KUALA LUMPUR: After two consecutive years of a double-digit drop in operating profits, Khazanah Nasional Bhd believes that its refreshed strategies will put it on the right track towards growth.

       The sovereign wealth fund (SWF), whose asset under management has surpassed RM134bil, has also set its sights on becoming a more “active corporate player” in the Malaysian capital markets.

       As part of its Advancing Malaysia initiatives, the SWF said it aims to reinvigorate the Malaysian market by crowding in new private investments, as well as future-proofing corporate Malaysia by bringing together the right partners, management team and owners for its investee companies.

       It also wants to drive best corporate governance by holding the board of directors and management accountable for business strategy and performance.

       In addition, Khazanah aims to work with regulators to strive towards consistent, fair and sustainable policies.

       Datuk Amirul Feisal Wan Zahir, (file pic) who hosted his first annual briefing yesterday as Khazanah’s managing director, said the SWF wants to have a “louder voice” within corporate Malaysia and bring more private companies to the capital market.

       “These last two years have been very challenging for us to navigate volatile markets and the social and economic impact of the pandemic.

       “We must continue to rally together and take this opportunity to chart a path towards growth, emerging stronger as a nation.

       “We truly believe that Khazanah’s refreshed strategy will allow us to achieve this, and to this end, we call upon our fellow Malaysians to join us on this journey towards Advancing Malaysia,” he said.

       Under the Advancing Malaysia initiatives, Khazanah said new growth sectors will be catalysed via the Dana Impak allocation of RM6bil over the next five years.

       Aligned to the global megatrends, six themes have been identified for Dana Impak, namely, digital society and technology hub; quality health and education for all; decent work and social mobility; food and energy security; building climate resilience; and competing in global markets.

       Khazanah also seeks to facilitate flows of knowledge, networks and investment opportunities through its global investments and partnerships, in addition to building capacity and developing vibrant communities for the benefit of Malaysians.

       In 2021, the SWF delivered another RM2bil in dividends to the government, even as its operating profits suffered a drop of almost 77% year-on-year (y-o-y) to RM670mil from RM2.9bil in 2020.

       The disappointing operating profit was due to the financial assistance extended to its airline and tourism businesses that faced headwinds from Covid-19.

       Khazanah via Malaysia Aviation Group Bhd owns Malaysia Airlines Bhd. Meanwhile, Khazanah undertakes its tourism operations via Themed Attractions Resorts & Hotels Sdn Bhd, according to its website.

       Khazanah’s profit in 2021 was also impacted by lower fair value gains and a lower dividend income from investee companies on the back of subdued 2020 earnings.

       In 2020, Khazanah’s operating profit fell 61% y-o-y and it delivered a dividend payment of RM2bil.

       Its net asset value (NAV) in 2021 grew from RM79bil to RM86bil, despite facing the headwinds brought on by the Covid-19 pandemic.

       The SWF said this brought the compounded annual growth rate to 5.8% since 2004 as it continued to fulfil its mandate to grow and safeguard the nation’s assets.

       Over the course of the year, Khazanah deployed RM8.7bil in new investments, with 41.7% or RM3.6bil invested in Malaysia, and RM4.8bil raised from monetisation of assets in its portfolio.

       On the performance of its Commercial Fund, Khazanah said it met long-term expectations with a NAV time-weighted rate of return (TWRR) of 19% in 2021, which represents a three-year rolling return of 7%. This puts it on track to meet its long-term five-year rolling target of Consumer Price Index of 3%.

       Khazanah attributed the recovery of the listed portfolio in Malaysia to a recovery after three years of underperformance, successful monetisation of private equity investments in the United States and Europe and strong performance of its new, still-in-progress Public Equities Developed Market deployment programmes.

       Khazanah’s portfolio rebalancing towards the target Strategic Asset Allocation saw further deployment into public equities – developed markets, real assets and private equity.

       For its Malaysian assets, the focus continues to be on value-creation efforts to future-proof and drive performance improvements in their businesses.

       Meanwhile, the Strategic Fund recorded a NAV TWRR of negative 11.4% in 2021 due to investments that were sensitive to the pandemic, namely, in the aviation and tourism sectors.

       Khazanah also announced yesterday that it will be consolidating its commercial and strategic funds into a single diversified portfolio, as part of its new “Advancing Malaysia” strategy.

       This is aimed at building the financial strength of the SWF.

       Nevertheless, despite the consolidation of funds, he said Khazanah will still work with the government to decide on the sale of any assets with national interest.

       “Companies like Telekom Malaysia Bhd (TM) and Malaysia Airports Holdings Bhd, etc, we do demand commercial returns regardless.

       “The question of what is strategic or not strategic will depend on who you ask. It is easier for us to put everything into one and within that, there are different asset classes that you see depending on performance.

       “What we are working towards is a strategic asset allocation that tries to get maximised returns based on the risk appetite that we have,” said Amirul Feisal.

       Moving forward, Khazanah will have four portfolios, namely, the investment portfolio, the Dana Impak portfolio, developmental assets and special situation assets with distinct return expectations and priorities.