Khazanah focuses on tech investments in the US


STATE-OWNED investment arm Khazanah Nasional Bhd will continue to seek investment opportunities in the US, particularly in the innovation and technology sector.

In a statement last Friday, Khazanah said its investments in the US were well within its mandate as a strategic investment fund that creates long-term value for Malaysia via multiple sectors and geographies.

In line with its policy to progressively diversify its investment portfolio overseas, Khazanah opened Khazanah Americas Inc in San Francisco in September 2013, with a focus on the innovation and technology sector.

The San Francisco office is the third of Khazanah’s five foreign offices, the others being in Beijing, Mumbai, Istanbul and London.

To date, the sovereign wealth fund has made a total of 15 investments worth approximately US$410 million (RM1.7 billion) in the US, principally in the technology sector.

“Our investments in the US represent 1.3% of Khazanah’s portfolio realisable asset value of RM145.3 billion as at Dec 31, 2016,” Khazanah said.

The strategic investment fund said due diligence is practiced, as the process of origination and evaluation of investment proposals followed a strict process, before the documents are handed over to the board of directors for consideration and approval.

“Overall, long-term value creation from our investment portfolio remains steady, with our portfolio net worth adjusted having increased 3.1 times, or growing at a compounded annual growth rate of 9.3% per annum for the period from May 2004 to Dec 31, 2016,” Khazanah said.

Last week, Prime Minister Datuk Seri Mohd Najib Razak announced that Khazanah and the Employees Provident Fund (EPF) had planned to expand their investments in the US.

Apart from being the primary funder for 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, EPF is putting US$3 billion to US$4 billion on the table for infrastructure rebuilding projects. This will add to EPF’s US$7 billion investment in US-based equities.

Inter-Pacific Research Sdn Bhd head of research Pong Teng Siew told The Malaysian Reserve that if US President Donald Trump’s proposed infrastructure spending is passed in Congress, it will have a massive impact on EPF’s income.

“Infrastructure — roads, bridges, subways, railway lines, highways — in the US are in poor condition and have not been replaced. In comparison to China, who has invested aggressively in new infrastructure, the US is far off.

“I’m not sure if the allocation can be somehow obtained from Congress. It still looks like some bargaining is involved. We will have to wait and see where the opportunities that will arise. It is not a given yet,” Pong said.