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1 Khazanah as an SWF and industrial policy Friday 6 June 2014.

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Presentation on theme: "1 Khazanah as an SWF and industrial policy Friday 6 June 2014."— Presentation transcript:

1 1 Khazanah as an SWF and industrial policy Friday 6 June 2014

2 2 Khazanah’s House Chart sets out our scope of activities Source: Khazanah analysis

3 3 The political economy continues to swing between state and market “Political Economy Balance” – State vs Markets ILLUSTRATIVE (Not-to-scale) Source: Khazanah analysis; “In Search of Gold and the Golden Mean” speech at Invest Malaysia April 2011

4 4 Steady growth in portfolio value with acceptable level of risk Note 1: Based on unaudited 2013 accounts Note 2: RAV: Market value of all equities, securities and cash held. Where no market price is available, a conservative estimate of value is used. Note 3: NWA: RAV less Total Liabilities and adjusted to measure value created Note 4: Compounded Annual Growth Rate Source: Khazanah analysis

5 5 Whilst still largely domestic focused, we continue to gradually expand our regional exposure Note 1: An estimate of attributable value according to the countries where investee companies have operations Source: Khazanah analysis RAV by domicile of companies RAV by geographic exposure 1

6 6 SOEs have outperformed the rest of the market, underpinned by fundamental improvements Source: Bloomberg; companies’ financial reports; analyst consensus estimates for 2013; PCG analysis; Khazanah analysis Phase 1: Mobilisation, Diagnosis & Planning Phase 2: Generate Momentum Phase 4: Full National Benefit 5/ th July 2005 Transformation Manual Launch  Policy Guidelines  Ten 2005/6 Initiatives 14 months months 2-5 years 5-10 years onwards  2005/6 Initiatives implemented  Full roll-out in place  Key policies endorsed and executed upon  Early fruits of sustainable improvements  Maintain momentum  Tangible & sustained benefits across GLCs  Visible benefits to all stakeholders, e.g., customers, vendors, employees, etc.  Large scale strategic and financial changes made  Material changes to Boards  Several regional champions  Most GLCs performing at par with competitors  KPI and PLCs  Performance contracts  Board composition reform  Revamp of Khazanah  GLC leadership changes /2005  Diagnosis of GLCs conducted  Determination of Policy Principles  Initial 2004 Initiatives launched Targeted outcomes: 2004 Measures PCG formed 2004 Phase 3: Tangible Results We are here

7 7 SOEs have been restructured via transformative transactions … Investment into Lippo Bank and subsequently Bank Niaga in Indonesia to support CIMB’s regionalisation strategy Today, the group has over 1,000 branches and 40,000 employees across 17 countries Demerger of TM and Axiata in 2008 to allow both companies to focus on core growth strategies TM’s HSBB offering has reached more than 665,000 customers across Malaysia whilst Axiata has 215m subscribers across Asia Merger of UEM Land and Sunrise to form Malaysia’s largest property developer by market capitalisation Synergistic transaction to leverage UEM Land’s landbank and Sunrise’s expertise in luxury property development Consolidation of regional healthcare players to form the world’s second largest private healthcare group Recently listed in both KL and Singapore to overwhelming response RM23bn privatization of PLUS by UEM Group and EPF National Fund Management – transfer of a mature cash-generating asset to new owners who can better harness its strengths

8 8 … with many now on course towards regional championship A number of Malaysian companies are poised for regional championship: Global Challengers (2006)South East Asian Challengers (2012) …in line with our roles in the NEM: Source: BCG: “New Global Challengers” and “Companies Piloting a Soaring Region”; PCG

9 9 Khazanah has successfully delivered on milestones in Iskandar Malaysia projects and other NEIs, with much more work in the pipeline Source: Iskandar Regional Development Authority (“IRDA”); Khazanah analysis

10 10 At Khazanah, we create value for the wider stakeholder economy Corporate Responsibility Knowledge Development Support of National Transformation Initiatives Human Capital Ideas & Thought Leadership Performance-Focus, Transformation and Execution Khazanah as Macro-Manager, GLCs as Micro-Managers Sovereign Development Fund, not just SWF Sensible Finance, Real Finance, and Islamic Finance Cities and Economic Density Complementary Advantage and Collaboration Regional Champions Malaysia Inc. v3.0 – Rebalancing and Crowding-in Talent and Culture Institutionalize Board Composition of Khazanah-Linked Companies Source: Khazanah analysis


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