(Updated)

EPF launches world's largest syariah private equity SMA fund with US$600m allocation

EPF launches world's largest syariah private equity SMA fund with US$600m allocation
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KUALA LUMPUR (Feb 26): The Employees Provident Fund (EPF) said it had launched a syariah private equity (PE) direct and co-investment separate managed account (SMA) fund with an allocation of US$600 million (RM2.43 billion).

This is the world's first and largest syariah private equity SMA fund, said the EPF in a statement today.

Through the allocation, the EPF will have three SMAs of US$200 million each to be managed by three private equity fund managers — BlackRock, HarbourVest Partners LLC and Partners Group AG — with a global mandate that focuses on direct and co-investment strategies into growth and buyout transactions.

The investment period is from 2021 to 2025, while the fund term will run from 2021 to 2031, subject to further extensions with the EPF’s consent.

The EPF said the SMAs had appointed Amanie Advisors Ltd, Dubai and ZICO Shariah Advisory Services Sdn Bhd as the syariah advisers to ensure that all investments are syariah-compliant.

The SMAs were structured based on either a wakalah structure, or a combination of both wakalah and murabahah structures, subjected to syariah investment guidelines.

“We are proud to be the first institutional investor to establish a syariah-compliant PE direct and co-investment fund, and this is the largest of its kind globally, with a global investment mandate. The EPF has been working on this initiative since 2018 as we seek to diversify our investment portfolio to ensure we can provide sustainable returns to our members,” said chief EPF officer Tunku Alizakri Alias.

“The EPF has great confidence in the three asset managers to carry out direct and co-investment activities on the fund’s behalf as they have a long history of investing in PE and several exposures in managing syariah-compliant mandates,” he added.

The EPF’s PE arm has a global fund exposure with strategies covering growth, buyout, middle-market capitalised and large-market capitalised strategies totaling 106 active investments with a total commitment of US$12.05 billion.

As of the second quarter of 2020 (2Q20), the top three regions in which the EPF had invested under PE mandates were North America (42%), Europe (21%) and Greater China (12%).

Lam Jian Wyn