Khazanah sold assets worth RM18.8b to pay debts, channel in new investments

Proceeds from the divestments are used to invest into new investments besides repaying its maturing debts, says Azmin


KHAZANAH Nasional Bhd has divested assets totalling RM18.8 billion between May 2018 and June this year as the Pakatan Harapan pushes the fund to further pare down its debt which hit about RM55 billion last year.

Economic Affairs Minister Datuk Seri Mohamed Azmin Ali (picture) said proceeds from the divestments are used to invest into new investments besides repaying its maturing debts.

The government-owned fund sold RM3.2 billion worth of assets between May and December last year. Assets worth RM15.6 billion were disposed in the first six months of this year.

Azmin who sits on the Khazanah’s board, said the fund had announced plans to pare down its current debt of RM47 billion. The fund expects the debt reduction plans would take between three to five years.

Azmin did not provide details of the assets sold by Khazanah. Khazanah had disposed its 16% stake in IHH Healthcare Bhd to Japan’s Mitsui & Co Ltd.

Azmin was responding to Datuk Seri Ahmad Hamzah (Barisan Nasional-Jasin) who asked about the state-owned fund’s current financial performance and the total disposal of shares, assets and other interests.

Ahmad demanded justifications for the decision to sell off assets deemed valuable and amassed by the previous administration.

Azmin defended the asset stripping move by Khazanah.

“The investments made did not give any added value or the best returns to Khazanah which was why it recorded a massive loss last year. I would like to take this opportunity to also note that these losses had been identified by the past government but was omitted from Khazanah’s financial statements,” Azmin said.

He said between 2009 and 2018, throughout the period in which Datuk Seri Mohd Najib Razak served as prime minister (PM) and chairman of Khazanah, a total of 84 assets were sold.

“During this period, the Pekan MP was the PM. He disposed eight assets in 2009, seven assets in 2010, eight assets in 2011, 10 assets in 2012, six assets in 2013, six assets in 2014, 10 assets in 2015, 13 assets in 2016, 12 assets in 2017 and 4 assets in the first four months of 2018, bringing the total to 84 assets.

“So, why is he (Najib) challenging the government’s decision?” Azmin said.

Khazanah had captured headlines after a slew of asset disposals, including the divestment of its entire stake in an Indonesian toll-road operator for a reported US$500 million (RM2.1 billion).

The fund’s wholly owned unit Pulau Memutik Ventures Sdn Bhd has also agreed to sell its entire stake in Prince Court Medical Centre Sdn Bhd to IHH Healthcare for RM1.02 billion cash.

Recently, Khazanah’s joint-venture company with Singapore state investor Temasek Holdings Pte Ltd, M+S Pte Ltd, on Tuesday announced its decision to sell the luxury hotel component of the signature Duo mixed-use project for S$475 million (RM1.44 billion) to Hoi Hup Realty Pte Ltd.

According to M+S, this is the highest total price ever achieved for a standalone hotel transaction in Singapore, and the third-highest in Asia this year.

Khazanah had accumulated borrowings totalling about RM55 billion prior to the asset disposals exercise. A substantial portion of its borrowings are guaranteed by the government as its sole shareholder.

Khazanah reported a loss before tax of RM6.27 billion last year but expects a RM5 billion profit for this financial year.