Khazanah to shift HQ in 1Q20 to cut cost

by AZREEN HANI & ALIFAH ZAINUDDIN /pic by RAZAK GHAZALI

KHAZANAH Nasional Bhd will move its headquarters from Petronas Twin Towers to Mercu UEM in KL Sentral as the sovereign wealth fund seeks to reduce operational expenses.

The move, planned in the first quarter of next year (1Q20), will see the relocation of 300 staff and coincide with the lapsing of the leasing agreement with the world’s tallest twin towers’ owner, a source familiar with the matter told The Malaysian Reserve.

Khazanah owns the 29-floor Mercu UEM building via its wholly owned subsidiary UEM Group Bhd. It is believed that the fund is the only non-related oil and gas company operating at the tower.

The world’s tallest twin structure is home to state-owned energy firm Petroliam Nasional Bhd (Petronas). Over the years, Petronas has been taking back the spaces at the two glistening steel structures to accommodate its own business needs.

The world’s tallest building from 1998 to 2004 was under KLCC Property Holdings Bhd, which later — under a corporate restructuring — formed the KLCCP Stapled Group and listed in the KLCC Real Estate Investment Trust.

The Petronas subsidiary also owns Suria KLCC, the Mandarin Oriental Kuala Lumpur (KL) and Menara Maxis.

Khazanah’s shift to Mercu UEM is seen as part of the fund’s effort to improve operational and cost efficiencies after it posted its first loss in over a decade last year.

The loss was largely due to a hefty provision and kitchensinking of its books following the appointment of Datuk Shahril Ridza Ridzuan as its MD in August last year.

The fund — a major shareholder in some of the country’s largest listed firms such as Tenaga Nasional Bhd, Telekom Malaysia Bhd and Axiata Group Bhd — posted a loss before tax of RM6.27 billion.

Khazanah’s operations are already running at Mercu UEM, including the Khazanah Research Institute which occupies the 25th floor of the building.

Khazanah is expected to take up a few floors of the building which forms the business district of KL Sentral.

This will be Khazanah’s third head office since the fund was founded in 1993. Its first headquarters was located at the Putra World Trade Centre. It moved to its current office on the 33rd floor in Tower 2 of the Petronas Twin Towers.

Khazanah’s rental at the iconic twin towers is estimated at RM12-RM14 per sq ft a month. The relocation to Mercu UEM, where rates are about RM6-RM8 per sq ft a month, is expected to shave the fund’s operational expenditure by more than RM3 million annually.

The move to relocate followed other cost-cutting measures such as shutting down its office in London and scaling down operations in Turkey.

Khazanah had closed down its London’s office due to the high cost. The fund established its London office at The Shard — the city’s tallest skyscraper — to tap into Europe’s market.

According to a report by the Financial Times in August 2015, rental rates at the skyscraper go as high as £90 (RM579) per sq ft a year, based on a 10-year lease agreed by information technology firm Leonteq Securities (Europe) GmbH.

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

Khazanah is now embarking on a refreshed mandate to grow the country’s long-term wealth. The fund has investments in over 100 firms in more than 20 countries. This includes total current equity assets of US$15.4 billion (RM63.76 billion) under management invested in 14 securities.

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