By ALIFAH ZAINUDDIN / Pic By HUSSEIN SHAHARUDDIN
The Employees Provident Fund (EPF) has yet to detail the component of its multibillion dollar investment proposition in the US.
Although the pension fund has decided on an investment figure of between US$3 billion (RM12.6 billion) and US$4 billion for infrastructure redevelopment in the US, a source close to the matter told The Malaysian Reserve that the specifics have not been finalised.
“We (the EPF) know the overall figure we want to invest, but the particulars still have to be worked out. We have not actually gotten any deal yet. It is just an allocation,” the source said.
A possible area for investment could be in the rebuilding efforts in disaster-hit Texas and Florida. Hurricane Harvey, which hit southwestern Texas on Aug 25, had resulted in damages of up to US$70 billion, while the devastation caused by Hurricane Irma is priced at about US$50 billion, according to Bloomberg.
“It is something that we are keen to explore, but nothing has been decided,” the source said.
Additionally, the source hinted that EPF’s infrastructure investments may not be limited to civil constructions such as highways and buildings, as it sought for optimum returns.
During a delegation meeting with US President Donald Trump on Wednesday, Prime Minister Datuk Seri Mohd Najib Razak announced that state-owned investment arm Khazanah Nasional Bhd and the EPF will invest a combined amount of nearly US$15 billion in the US.
Apart from financing Malaysia Airlines Bhd’s planned purchase of 16 new Boeing aircraft worth an estimated US$3 billion, Khazanah will look to increase its current investment of US$400 million in high-tech companies in the Silicon Valley. Meanwhile, the EPF is offering additional infrastructure rebuilding funds to add to its existing US$7 billion equity investments in the US.
It is said the EPF is seeking to push its foreign investments to 30%, via infrastructure ventures.
At present, the EPF is heavily invested in equity and fixed income, as well as in property and other assets.
However, infrastructure investment remains low at 4.1%, with assets limited to Pinggiran Ventures Sdn Bhd, Ekuiti Merdu Sdn Bhd and PLUS Malaysia Bhd.
In a statement issued recently, the EPF said it will scrutinise foreign investment opportunities that fit its risk and return profile as a retirement savings fund.
It added that the US is a key market for the EPF given its size and depth.
As at the first quarter (1Q) of 2017, EPF’s overseas investment accounted for 29% of its total investment asset and contributed 37% to the total investment income of RM11.8 billion.
Income in the 1Q was a 74% marked improvement from the RM6.8 billion posted in the corresponding period a year ago, driven by better performances in the equity markets. The value of EPF investment assets also grew 2.2% to reach RM747.17 billion.