ValueCap to cease operations by end-September 2020

Investment firm will undertake MSS thrice next year and some of its 50 staff may be absorbed into its shareholding companies


STATE-OWNED investment vehicle, ValueCap Sdn Bhd, will cease its operations entirely by September 2020, after 17 years in business.

A source close to the matter said the investment firm — jointly owned by Khazanah Nasional Bhd, Retirement Fund Inc (KWAP) and Permodalan Nasional Bhd (PNB) — will undertake a mutual separation scheme (MSS) thrice next year, before ceasing operations by Sept 30, 2020.

“There are three different dates, first one being Jan 31, followed by April 30 and June 30, and this is considered the second round of MSS after last year,” the source told The Malaysian Reserve (TMR).

The source, who spoke under condition of anonymity, said some of the 50 staff that ValueCap has may be absorbed into its shareholding companies.

Last week, ValueCap announced it was in the process of exploring various strategic options for its two wholly-owned licensed asset management subsidiaries, VCAP Asset Managers Sdn Bhd and i-VCAP Management Sdn Bhd (i-VCAP), including divesting or winding up the companies.

The investment firm said both companies are proposing to terminate their respective wholesale funds, while i-VCAP is exploring various options in relation to the management of the exchange-traded funds (ETFs), including the possibility of transferring the ETFs to another licensed fund management company.

The decision to cease its operations, the source said, came from ValueCap’s shareholders.

Valucap’s average performance over the last five years has been healthy, posting good returns despite a poor last two years for the Malaysian equity market.

“While its fixed income performances have been ahead of the market, its equity performance is less than good,” the source said.

ValueCap’s investments, the source said, will be taken over by ValueCap’s shareholders and investors.

The source added that the RM20 billion capital injection four years ago by its shareholders has not been fully utilised. The amount utilised, however, was undisclosed.

“The balance will be given back to the shareholders. The money came mainly from Khazanah, PNB and KWAP,” the source added.

In 2015, former Prime Minister Datuk Seri Mohd Najib Razak announced an injection of RM20 billion into the investment firm to take advantage of the stock market corrections and enter the market without causing any disruption or volatility.

This was part of the government’s proactive measures to support the stock market and economy.

The first tranche was a fresh capital injection of up to RM8 billion, reported to be shared equally between the three shareholders. Of the total RM20 billion, each shareholder was to contribute 33.33%.

The source also noted the funds invested since ValueCap’s inception stood at RM18 billion with a return on investment of 6% on average annually over the last five years.

i-VCAP, incorporated on Oct 25, 2007, has a Capital Markets Services Licence issued by the Securities Commission Malaysia under the Capital Markets and Services Act 2007. Its principal business activity is the provision of Shariah-compliant investment management services.

VCAP specialises in sustainability-themed asset management based on Environmental, Social, and Governance factors.

According to Bloomberg, ValueCap has total equity investments worth US$760.4 million (RM3.2 billion) in 33 Bursa Malaysia-listed companies.

By sector, its largest exposure at present is in the financial (66.9%) and consumer staple (14.8%) sectors.

ValueCap’s largest investment is in Malayan Banking Bhd with 79.46 million shares or 0.71% interest valued at RM685.77 million.

ValueCap also has a 0.94% stake in CIMB Group Holdings Bhd valued at RM494.75 million and 2.06% in KLCCP Stapled Group valued at RM298.34 million.

ValueCap’s smallest investment is in Mitrajaya Holdings Bhd with a 1.01% stake worth RM2.73 million at market value.

It also owns 50 million shares in Sime Darby Plantation Bhd, now worth about RM273 million, 69 million shares in Telekom Malaysia Bhd worth some RM266.4 million and one million shares in Nestlé (M) Bhd valued at RM149.6 million.