Khazanah defends track record, reiterates it has well-established succession process

PETALING JAYA: Khazanah Nasional Bhd has defended its track record and reiterated that it has a well-established and orderly succession process, in response to an article published by a Singapore english daily this morning.
The strategic investment fund said the article gives an inaccurate and ultimately misleading picture of its financial performance due to the selective focus on a narrow and incomplete set of indicators.
Khazanah explained in a statement issued late evening, that it has a multi-pronged mandate that includes investing for growth and commercial returns domestically and internationally, while also undertaking developmental and national initiatives.
“The latter include the development of regional economic corridors, reforms of the education sector and the restructuring and catalysing of various economic sectors and national companies,” it added.
It said that the range of returns of these initiatives vary widely from low or even negative returns to significantly higher returns, averaging at the 9.3% per annum net worth adjusted (NWA) return.
It also highlighted the fact that it does not receive any regular capital injections which, combined with its need to reinvest for growth and national initiatives leads to the bulk of its returns being channeled into reinvestments rather than to dividends.
“As Khazanah does not receive regular capital injections unlike most sovereign and sovereign-linked funds, it needs to ensure that its returns are achieved with an appropriate level of risk undertaken,” it said.
The Straits Times’ article alleged that Khazanah is under pressure to show higher returns to boost government coffers as the government’s direct business investments managed by the fund has only returned an average of RM825 million in dividends annually over the past four years.
The article Khazanah’s declining NWA from RM111 billion in 2014 to RM102 billion as an indicator. It also called the NWA tabulation unclear, before stating that it largely measures the current value of Khazanah's portfolio plus dividends returned to the Treasury.