Khazanah reaped over RM3.2b from its investment in Alibaba, ahead of the retail group stock market floatation in 2014

by ALIFAH ZAINUDDIN/ pic by BLOOMBERG

KHAZANAH Nasional Bhd has divested a portion of its stake in Chinese e-commerce giant Alibaba Group Holding Ltd worth RM2.2 billion, underlining the fund’s urgent need to trim its stakes in non-strategic assets and shrink its presence abroad to yield more cash for the government.

The divestment is one of seven overseas investments disposed of by the sovereign wealth fund since Pakatan Harapan took over the federal seat in May last year, said Economic Affairs Minister Datuk Seri Mohamed Azmin Ali in a recent parliamentary reply.

Others included entire stake sales in BDO Unibank Inc worth RM1.56 billion, Farfetch.com Ltd (RM771 million), SEA Ltd (RM612 million), Infosys Ltd (RM201 million), PT Charoen Pokphand Indonesia Tbk (RM196 million) and a partial stake sale in Titan Industries Ltd (RM89 million).

The disposals are not uncommon given Khazanah’s role as an investment fund, Azmin said, adding that the sale of an asset is immediately considered once its financial and strategic goals are met.

Khazanah reaped over US$1 billion (RM3.2 billion) from its investment in Alibaba, ahead of the retail group stock market floatation in 2014. The state-owned fund invested a total of US$400 million in Alibaba in two tranches for over two years before the company became the world’s largest IPO.

This accounted for a stake of 0.6%. Khazanah has since retained an undisclosed amount of shares following the sale of some stake after the listing. Its paring in Alibaba and other overseas investments is in line with Khazanah’s plan to reduce its offshore presence.

In April, Khazanah MD Datuk Shahril Ridza Ridzuan confirmed reports that the fund would close its 10-staff office at London’s The Shard on high costs. Rental rates at the city’s tallest skyscraper are as high as £90 pounds (RM579) per sq ft per year, according to a report by the Financial Times in August 2015.

Azmin last month revealed that the fund divested RM18.8 billion worth of assets between May 2018 and June 2019. The amount of disposal stood at RM3.2 billion between May until December 2018, while another RM15.6 billion in assets were divested between January and June 2019.

The minister said returns from the divestment will be channelled into new investments and used to repay its maturing debts. Khazanah recently announced plans to reduce its debt by up to RM12 billion from RM47 billion currently in the next three to five years.

Azmin did not go into specifics, but he had made a reference to Khazanah’s 16% stake sell in IHH Healthcare Bhd to Japan’s Mitsui & Co Ltd, which it sold for US$2 billion in cash.

Khazanah has been making 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 offer.

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 Bhd for RM1.02 billion cash.

Most recently, Khazanah’s joint-venture company with Singapore state investor Temasek Holdings Pte Ltd, M+S Pte Ltd, 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.

M+S described the price agreed as the highest ever achieved for a standalone hotel transactions in Singapore, and the third highest in Asia this year.