Khazanah says exited TNB, Malakoff consortium with a healthy profit

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KUALA LUMPUR (July 15): Khazanah Nasional Bhd clarified today that it divested its 40% stake in Malaysian Shoaiba Consortium Sdn Bhd for a "healthy profit", as the project was completed and fully operational and after Khazanah achieved its commercial objectives of its investment in the consortium. 

Malaysian sovereign wealth fund Khazanah said in a statement today that it entered into a joint investment in 2005 with Malakoff Corp Bhd and Tenaga Nasional Bhd via the consortium, to support Malaysia’s entry into Saudi Arabia’s independent water and power producer market. 

"In accordance with the consortium’s shareholders agreement, our 40% stake was offered to the existing partners. Malakoff subsequently took the offer, which allowed Khazanah to exit with a healthy profit at a value based on future cash flows of the project.

"Khazanah assesses all opportunities for divestment against set financial and strategic targets. Assets may be considered for divestment once the intended investment objectives and targeted returns have been achieved, as is the case with the divestment of our stake in the consortium. Divestments may also depend on the strength of the market, as well as the availability, quality and credibility of buyers," Khazanah said.

Khazanah said today that its clarification is in response to various reports on the divestment of its 40% stake in Malaysian Shoaiba.

According to Khazanah, under its refreshed mandate, it operates on a two-fund model comprising a commercial fund and a strategic fund. 

"In general, our commercial fund is focused on creating a global portfolio that diversifies our assets and income for the country’s benefit. Our strategic fund focuses on strategic domestic investments, particularly in infrastructure.

"The proceeds from the divestment of our stake in the consortium, like all other divestments by Khazanah, are reinvested based on the objectives of the two funds, or are used to repay existing debts on our balance sheet. 

"For the year to date, Khazanah has committed investments amounting to approximately RM1.4 billion and reduced overall debt by approximately RM6.4 billion, in line with our corporate strategies. We further expect to undertake more investments in the second half of 2019, based on the opportunities that we are exploring," Khazanah said.