Khazanah offices in US, Mumbai and Beijing to remain

by ALIFAH ZAINUDDIN / pic by MUHD AMIN NAHARUL

KHAZANAH Nasional Bhd will continue to maintain its regional offices in the US, India and China amid plans to shut down its regional office in London and scale down operations in Turkey.

A spokesperson for the sovereign wealth fund told The Malaysian Reserve that its offices in San Francisco, Mumbai and Beijing are unaffected by plans to cut cost and remove non-performing assets. Khazanah currently has a total of five foreign offices, inclusive of the one in London.

“China, Mumbai and Silicon Valley (are) maintained. Istanbul to be scaled down,” a Khazanah official said when contacted.

Khazanah’s regional offices were set up to help the fund invest overseas, with Beijing being its first foreign office in 2008. Its office in Mumbai was founded that same year, followed by three other offices in London, San Francisco and Istanbul established in subsequent years.

Khazanah MD Datuk Shahril Ridza Ridzuan (picture) earlier confirmed reports that the fund would close its 10-staff office in London as it fell under Khazanah’s “high-cost” base operations.

Shahril Ridza said the move is made as part of the fund’s cost-saving plan, adding that assets will be managed from its Kuala Lumpur headquarters at the Petronas Twin Towers and other offices.

Khazanah established its London office at The Shard — the city’s tallest skyscraper — to better assess opportunities in technology-enabled sectors in Europe.

According to report by the Financial Times in August 2015, rental rates at the skyscraper were as high as £90 (RM579) per sq ft per year, based on a 10-year lease agreed by IT firm Leonteq Securities (Europe) GmbH. The price had set a new record in rental rates for that part of London then.

A check on the London tower’s website showed that Khazanah agreed to a 10-year lease for 11,500 sq ft of space for its first office in Western Europe.

In an interview with Bloomberg last month, Shahril Ridza said the decision to close down the office in London had “less to do with Brexit”, but more on “our plans in the near future”. He said Khazanah’s office in Turkey will be scaled down.

Shahril Ridza said the fund does not require a big presence in the UK or Turkey as it has started to exit its investments in the two countries without giving any further details.

However, he noted that both the US and China remain very important to Khazanah due to its investments in technology.

Khazanah had recently revamped its investment playbook by classifying its portfolios into separate commercial and strategic funds, after reporting its first-ever negative earnings in over a decade.

The US$39 billion (RM161 billion) fund posted a loss before tax of RM6.27 billion in 2018, with an impairment of RM7.3 billion — half of which was attributed to national carrier Malaysia Airlines Bhd.

The government is banking on the sovereign fund to raise money for its coffers, dragged by a fiscal deficit and a massive debt from a multi-billion dollar scandal at 1Malaysia Development Bhd. As such, Khazanah is now embarking on a refreshed mandate to grow the country’s long-term wealth.

Khazanah has investments in over 100 firms in more than 20 countries.