Thursday 28 Mar 2024
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This article first appeared in The Edge Financial Daily on September 28, 2018

KUALA LUMPUR: Permodalan Nasional Bhd (PNB), the country’s largest fund management company, will revise its five-year transformation programme that ends in 2022, says Tan Sri Dr Zeti Akhtar Aziz who took over as group chairman from Tan Sri Abdul Wahid Omar on July 1.

Dubbed “Strive 15”, the former Bank Negara Malaysia (BNM) governor said given that the domestic and international environment are rapidly changing and faced with many new challenges, she is of the view that it is an appropriate time to revise the transformation programme and “see what changes we need to make”.

In November 2016, PNB unveiled the five-year strategic plan that included a target to increase its total assets under management (AUM) to RM350 billion by 2022.

Between January and August this year, PNB increased its AUM by 7.26% to RM288.1 billion from RM268.6 billion a year ago. It also announced an income distribution of six sen per unit across 12.7 billion units held by 440,000 Amanah Saham Malaysia Three account holders, for total income distribution of RM755 millon. International exposure rose to 2.6% from 1.9% during the same period under review.

Zeti said she takes cue from how BNM underwent three organisational transformations during her tenure as governor from 2000 to 2016.

“I would like to be equally ambitious here (PNB)... to achieve a higher level of performance to greater organisational capability,” she said, adding that a key focus is higher utilisation of technology to improve operations.

In terms of investment approach, Zeti said PNB could gradually diversify into the “great opportunities” in the international emerging markets to better manage risks, and also to strengthen its buffers in light of uncertainties across the market environment.

“This will be the approach that we are taking. We will not rush into it, we will build our capabilities and then venture forward,” she told a press conference to announce PNB’s third-quarter 2018 performance yesterday.

On PNB’s investee companies, Zeti said the immediate focus is to “consolidate what has been done” and ensure previous deals achieve their desired objectives.

“There is going to be a period of consolidation. Of course, we don’t exclude any market-driven merger or demerger exercise, but not precipitated by PNB.

“We will let it be driven by market process,” she added.

Zeti also hinted a slowdown in PNB-driven corporate exercises among companies it has exposure in, as the company digests previous deals and mergers conducted during the time of her predecessor, Abdul Wahid.

“At this point, we are going to consolidate what have been done and bring the execution of the consolidation to realise the objectives.

“We have board representations in these companies. and we will use board activism to drive these changes,” she added.

Elaborating on that, PNB president and CEO Datuk Abdul Rahman Ahmad pointed to PNB’s “core companies”, that is, companies which PNB has shareholding of over 10%, or exposure of above RM1 billion — whose stock performance has lagged behind the FBM KLCI year-to-date.

PNB reportedly has over 40 companies in this core category, including the likes of Telekom Malaysia Bhd, whose share price has fallen by 48% year-to-date. This is an expansion from PNB’s successful value-enhancing drive across its strategic companies where PNB has controlling stakes, in 2017.

“We started effectively with the support in the participation of Sapura Energy Bhd’s transformation exercise, which we believe if executed well will deliver positive results in the future,” said Abdul Rahman.

“Obviously we understand the external challenges that they are facing… so I think our focus now is to engage with them,” he added.

Zeti also said PNB supports the government’s move for government-linked investment companies like PNB, the Employees Provident Fund and Khazanah Nasional Bhd to reduce their shareholdings in companies listed on Bursa Malaysia. “The call was made on grounds that you will give greater liquidity and trading in the market and that is a positive direction.

“But it needs to be managed so it is not disruptive to the financial markets,” she noted.

In January, Abdul Wahid proposed to carve out 20% in 48%-owned Malayan Banking Bhd through issuance of Islamic shares.

On this, Zeti said it is one of many areas to be looked into, and that “there’s potential to do so” considering Malaysia’s maturity in the Islamic finance market but did not elaborate.

Meanwhile, PNB’s gross income for the first eight months of this year rose 3.9% year-on-year (y-o-y) to RM12.19 billion from RM11.74 billion.

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