PNB to boost private investments, fixed-income assets to reduce cash pile

KUALA LUMPUR: Permodalan Nasional Bhd (PNB) plans to boost private investments and fixed-income assets starting next year as part of a five-year target to reduce its cash holdings, its top executive said.

State-linked PNB, with RM271 billion in assets under management as at end-September, intends to reduce its cash holdings to 12% by 2022 from the current 18.5%.

With PNB’s stated goal to grow its assets to RM350 billion by 2022, that would mean it will need to find investment deals for an extra RM23 billion.

“The main beneficiary would be private investments, then fixed income followed by property, in that order,” PNB group chairman Tan Sri Abdul Wahid Omar said at the Reuters Global Investment 2018 Outlook Summit today.

“In the case of private investments, it takes time because we need to identify unlisted investments and private equity funds for us to allocate,” he said, adding that there would be more of such investments in the coming year, without elaborating.

PNB expanded its infrastructure portfolio in January with the RM380 million acquisition of toll concession asset Sistem Lingkaran-Lebuhraya Kajang Sdn Bhd, through its unit Projek Lintasan Kota Holdings Sdn Bhd (Prolintas). The fund is undertaking an internal restructuring to list Prolintas next year.

PNB’s fixed-income assets accounted for 5.3% of its total portfolio as of end-August, up from 3.8% a year ago. Private investments accounted for 2.8% and real estate for 3.3% as of end-August.

But PNB’s primary asset class is public equity, with 69% invested. It is a strategic investor in the biggest companies in Malaysia, including the largest lender by assets Malayan Banking Bhd and conglomerate Sime Darby Bhd.

PNB is spearheading the demerger of Sime Darby into three separate businesses by the end of this month, to unlock value.

“That’s why we see an improvement in share value, there is already a 20% uplifting of value,” Abdul Wahid said.

PNB, which has 98% of its assets parked in Malaysia, is now looking to increase its international exposure in 2018.

“We are continuing with the efforts to optimise our asset allocation and one of them involves also looking at balancing our international portfolio,” Abdul Wahid said. “It depends to what extent the ringgit, we believe, will strengthen against the US dollar.”

When he took the helm at PNB in August last year, the weak ringgit hampered appetite for global assets.

“The ringgit has since strengthened to the 4.18 level currently so we are again looking at the opportunities,” he said. – Reuters