Friday 29 Mar 2024
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KUALA LUMPUR (Jan 15): Prior to the assets transfer to special purpose vehicle (SPV) Urusharta Jamaah Sdn Bhd, Lembaga Tabung Haji's (TH) exposure to the equities market was too high, according to its group managing director and chief executive officer Datuk Seri Zukri Samat.

"We are not fund managers, our role is basically to administer the Haj, so the focus of investment should change. I think the focus now will be more on fixed income, rather than equity," he told reporters at a media briefing on the institution's corporate turnaround plan here today.

Zukri noted that in 2016, 55% of its assets were in equities, which then decreased to 50% in 2017. Given its main role of managing Haj operations, and not as fund managers, he said this rate is too high, and hence, TH is working on a new asset allocation.

"It's not that we are not going into equity, but I think the balance will be skewed more towards the fixed income, where we have a steady stream of return.

"We have not tabled the new asset allocation to the board yet, but as the CEO, I can personally say that we should have 60-70% in fixed income, depending on the fund size that we have (after hibah distribution)," he said.

To prove the pilgrim fund's commitment to transparency, Zukri said Tabung Haji will also provide quarterly updates on financial performance beginning first quarter of 2019 so that depositors and the public can track how the fund is doing.

After completing the transfer of all underperforming equities to the SPV, Zukri announced that TH has managed to restore its balance sheet. As at Dec 31, 2018, he noted that TH's assets are equal or slightly more than its liabilities, putting it in a position to pay hibah for 2018.

"For 2018, we will be legally capable — based on the Act (Tabung Haji Act 1995) — of declaring hibah. But please, don't expect too much for 2018 because we just recovered from a 'fever'," he said.

Of the 106 listed domestic equities that it has transferred to Urusharta Jamaah, Zukri revealed that the highest unrealised loss in a stake is 96.5%. Top 10 losers accounted for almost RM4.6 billion of unrealised losses, mainly from stocks in plantation, oil and gas, property, and construction sectors.

Meanwhile for the 29 properties and lands it has transferred to the SPV, 18 have zero income and are mainly vacant lands.

"These assets are not liquid and not in line with our new liquidity framework," he said.

One of the properties in question was the piece of land in Tun Razak Exchange (TRX) that TH bought from 1Malaysia Development Bhd for RM188.5 million, which Zukri said it sold back to the government at a premium.

However, he did not disclose the total unrealised losses from the underperforming stakes in equities and properties. Overall, RM19.9 billion worth of assets have been transferred to the SPV, 80% of which were in the form of equities with impairments exceeding 20% and the balance were in properties with yields of less than 2%.

In exchange for the assets, the SPV will issue a RM10 billion seven-year Sukuk and RM9.9 billion in Islamic redeemable convertible preference shares.

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