Khazanah’s investment playbook set for revamp

Sovereign fund likely to cut stakes in some top state-linked firms

KUALA LUMPUR: Khazanah Nasional will likely cut stakes in some top state-linked firms as the government overhauls the sovereign wealth fund’s investment strategy, after revamping its board last week, to boost transparency and slash national debt.

The performance of the US$39bil fund has been muted, but backed by past governments, its investments have spread across various sectors globally, with one of the highlights being its profitable stake in Alibaba bought before the e-commerce giant’s blockbuster IPO in 2014.

Prime Minister Tun Dr Mahathir Mohamad is keen to make the fund leaner and use sale proceeds to cut massive debt piled up in a multi-billion dollar scandal at state fund 1Malaysia Development Bhd (1MDB), bank- ing and financial industry sources said.

Khazanah will likely trim stakes in CIMB Group Holdings, chaired by the brother of former Premier Datuk Seri Najib Tun Razak, regional telecoms firm Axiata Group and restructure struggling Telekom Malaysia in the coming months, the sources told Reuters.

It could also review its stake in IHH Healthcare, which has grown into one of the world’s biggest healthcare service providers with a US$12bil market value, they added.

IHH has been in news recently for its winning US$1.1bil bid to takeover India’s Fortis.

“In the current climate, Khazanah is bound to be smaller,” said a banker, who also noted that property projects in the southern Malaysian region of Iskandar and overseas infrastructure deals were ripe for sales.

Malaysia is saddled with over RM1 trillion in debt, swelled by liabilities tied to 1MDB, the scandal over which led to the ouster of Najib’s government and the return of 93-year-old strongman Dr Mahathir, who has begun a swift corporate clean-up.

Sources said other options the government could consider for Khazanah include partial stake sales in regulated state-linked firms as these have crowded out the private sector. Overseas investments could also be trimmed.

“Strategic sell-downs are going to be part of the rationalisation drive by this government,” said a corporate lawyer familiar with the government’s approach.

Khazanah and the Prime Minister’s office did not reply to emails from Reuters seeking comment for this story. — Reuters