Khazanah’s Asset Portfolio Surges to Record With KLCI Rally

Khazanah Nasional Bhd., Malaysia’s state investment company, said the value of its holdings climbed to a record last year as local share prices surged.

The net asset value of Khazanah’s investments climbed 19.1 percent to 103.5 billion ringgit ($31 billion) at the end of 2013 from 86.9 billion ringgit a year earlier, the Kuala Lumpur-based fund said in a statement yesterday. It outperformed an 11 percent gain in the benchmark FTSE Bursa Malaysia KLCI Index, which closed at a record on Dec. 30.

“We are starting this year from a position of relative strength and hopefully our portfolio can handle any storms,” Khazanah Managing Director Azman Mokhtar told reporters in Kuala Lumpur yesterday. Last year “was eventful with highlights including better operating performance across practically all investee companies and deepening of the regional presence of various companies.”

Khazanah owns stakes in some of Malaysia’s biggest listed companies, including electricity producer Tenaga Nasional Bhd., which rose 64 percent last year, the biggest gainer on the country’s stocks benchmark. It also controls Malaysia Airports Holdings Bhd., which jumped 73 percent in 2013, and developer UEM Sunrise Bhd., which climbed 12 percent, according to data compiled by Bloomberg. The fund’s 2013 returns compare with a 24 percent increase in the MSCI World Index, the biggest gain since 2009, and a 5 percent decline in the MSCI Emerging Markets Index.

Asset Sales

Khazanah has cut non-core Malaysian interests, while making more acquisitions abroad after Prime Minister Najib Razak called for state funds not to crowd out local entrepreneurs. The fund trimmed stakes in companies including Tenaga Nasional Bhd. last year and divested its entire 45 percent stake in technology company Time Engineering Bhd.

“They had a good year,” said Victoria Barbary, director at the London-based Institutional Investor’s Sovereign Wealth Center. “The investments show that they still have a solid base at home.”

About 90 percent of Khazanah’s gross assets belong to companies which are domiciled in Malaysia, according to a presentation on its website.

The fund said pretax profit increased to 3.1 billion ringgit in 2013 from 2.1 billion ringgit a year earlier. It paid a 650 million-ringgit dividend to the government, according to the statement.

In 2012, Khazanah booked one-time gains from divesting national carmaker Proton Holdings Bhd. and initial share sales for IHH Healthcare Bhd. and pay-TV operator Astro Malaysia Holdings Bhd.

Insurance IPO

Khazanah is seeking more Asian insurance investments, Azman said, adding it may list its insurance assets in the future. It teamed up with Sun Life Financial Inc. in January 2013 to buy 98 percent of Aviva Plc and CIMB Group Holdings Bhd.’s Malaysian insurance joint venture for 1.8 billion Malaysian ringgit. It also bought a 90 percent interest in Turkish insurer Acıbadem Sağlık ve Hayat Sigorta AS for $252 million.

The fund also plans an initial public offering of its theme park business called Themed Attractions and Resorts Bhd., though it is no hurry, Azman said. This unit operates theme parks for brands including KidZania, Legoland and Hello Kitty.

Ganen Sarvananthan will leave as Khazanah’s head of investments on April 30 to join the Fort Worth, Texas-based private-equity firm TPG Capital as partner and managing director of its Asia business, the state fund said. He will be replaced by Dominic Silva, currently executive director investments, who will assume his new role from Feb. 1.

Ahmad Zulqarmain Onn will join Khazanah on May 1 as executive director of investments, from government bonds-guarantee agency Danajamin Nasional Bhd. where he is currently chief executive officer. Zaida Khalida Shaari will be promoted to also become an executive director of investments from Feb. 1, it said.

Before it's here, it's on the Bloomberg Terminal.