EPF to in­vest more in in­fra­struc­ture as­sets

The Sun (Malaysia) - - MEDIA & MARKETING - BY EVA YEONG

KUALA LUMPUR: The Em­ploy­ees Prov­i­dent Fund (EPF), which is ac­quir­ing a 40% stake in the op­er­a­tor of the Duta-Ulu Ke­lang Ex­press­way (DUKE), aims to ex­pand its in­vest­ment in in­fra­struc­ture.

“EPF’s in­vest­ments are quite di­ver­si­fied and one of the ar­eas that we are try­ing to grow is in the area of in­fra­struc­ture be­cause the na­ture of in­fra­struc­ture in­vest­ments is some­thing that is very long term, it meets our risk re­turn pro­file,” said deputy CEO (in­vest­ment) Datuk Mo­hamad Nasir Ab Latif.

“These sort of in­vest­ments have the po­ten­tial to give us a real rate of re­turn... our tar­get is al­ways to at least meet 2% real rate, mean­ing in­fla­tion plus 2%,” he told re­porters at the sign­ing of a con­di­tional share sale agree­ment (SSA) with Ekovest Bhd yes­ter­day.

EPF cur­rently has RM690 bil­lion worth of as­sets with a strate­gic as­set al­lo­ca­tion of 51% in fixed in­come, 36% in eq­ui­ties and 10% in al­ter­na­tives, which in­cludes pri­vate eq­uity, in­fra­struc­ture as well as real es­tate. Its in­fra­struc­ture al­lo­ca­tion is about 3%.

“The 3% is ac­tu­ally strate­gic as­set al­lo­ca­tion, we’ve not ac­tu­ally in­vested up to 3%. It is much less than that. We are al­ways look­ing for op­por­tu­ni­ties in the in­fra­struc­ture space. When you say in­fra­struc­ture space, it is not just toll roads. It may be air­ports, ports or power plants,” said Mo­hamad Nasir.

EPF se­nior general man­ager of pri­vate mar­kets depart­ment Mo­hamad Hafiz Kas­sim said the as­sets that EPF looks at typ­i­cally have cash flow vis­i­bil­ity and are brown­field in na­ture. “Mean­ing, they are fully op­er­a­tional and have a track record in terms of traf­fic as well as reg­u­la­tory frame­work in terms of pay­ment and oth­ers.”

Yes­ter­day, EPF en­tered into an SSA with Ekovest’s wholly-owned sub­sidiary Nuzen Corp Sdn Bhd for the sale of 40% of the is­sued and paid-up share cap­i­tal of Kon­sor­tium Le­bu­raya Utara-Timur (KL) (Kes­turi) for RM1.13 bil­lion cash.

Nuzen is the hold­ing com­pany of Kes­turi, which is the con­ces­sion holder of DUKE, a 34km high­way com­pris­ing two phases with a con­ces­sion pe­riod of 54 years. Phase 1 is al­ready in op­er­a­tion while Phase 2 is ex­pect­ing to com­plete con­struc­tion and com­mence toll col­lec­tion by the first half of 2017.

Ekovest man­ag­ing di­rec­tor Datuk Seri Lim Keng Cheng said the two phases are ex­pected to con­trib­ute 30% to Ekovest’s over­all rev­enue.

Upon com­ple­tion of the SSA in the first quar­ter of 2017, EPF will pay RM921 mil­lion in cash to Ekovest. A fur­ther RM209 mil­lion in cash will be paid af­ter the is­suance of the cer­tifi­cate of prac­ti­cal com­ple­tion for Phase 2, of which RM149 mil­lion will be de­posited in an in­ter­est-bear­ing des­ig­nated ac­count by Ekovest and sub­jected to in­vest­ment per­for­mance.

“That RM149 mil­lion that is out­stand­ing will be re­leased when the re­turn ob­jec­tives are met, which is ba­si­cally when the high­way hits an IRR of 11.5% and above,” said Ekovest ex­ec­u­tive chair­man Tan Sri Lim Kang Hoo.

From left: Lim Kang Hoo, Lim Keng Cheng, Mo­hamad Hafiz and Mo­hamad Nasir at the sign­ing cer­e­mony yes­ter­day.

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