PETALING JAYA: Permodalan Nasional Bhd (PNB) looks to dig deeper into its diversification strategy in 2021, as it has paid off handsomely against the backdrop of a challenging year.
Its president and group CEO Ahmad Zulqarnain Onn pointed out that its international assets contributed 25.5% of the gross income despite accounting for only 12% of its overall portfolio.
Of the 12%, the fund revealed 8.7% comprised of public equity investments which grew from 5.9% the year before. In terms of group income composition, the global equities contribution increased 18-fold between 2017 and 2020, expanding from RM200 million to RM3.7 billion.
“The strategy has yielded positive results and strengthened our financials; we will continue with diversification efforts judiciously across all asset classes and geography to build an all-weather portfolio that all Malaysians deserve,” he told the media at the virtual launch of PNB’s Annual Report 2020 yesterday.
Over the long term, Zulqarnain said the increase in global market exposure will be supported by a robust decision process and the success of its international growth will take into account the ringgit’s position, the fund’s concentration in certain positions and expanding its retail product suite.
Domestically, he plans to increase the value of its strategic and core companies through engagement and by looking at capital market transactions that would be value-accretive for the fund.
“We set short and medium-term targets for the companies, talking to them about capital allocation and how to make it more disciplined and also engage them about the adoption of best practices for strategy and board composition as well as value creation plans.”
The president stated that PNB’s aspiration for its companies is to outperform the three-year return of the local index.
For 2021, the fund stated there are some themes it favours, namely renewable energy, 5G, infrastructure and healthcare.
Zulqarnain pointed out that Covid-19 has proven these are defensive sectors and they do provide stable recurring yields, that act as a cushion against any prevailing market uncertainties. It also allows us to realise income on a regular basis as part of dividend payments for our funds.
PNB is also starting to participate in private equity in secondary deals, while within real estate it has been investing in supply chain logistics, industrials, education and data centres.
On the Merdeka 118 tower, PNB group chairman Tan Sri Dr Zeti Akhtar Aziz said that it is on track for completion in the second half of 2022 and will be ready for occupation in the second half of that year.
Despite a pause in construction during the movement control order period, she elaborated that this will translate into a two to three-month delay for the project.
“Currently, the building has reached level 118, with the facade at level 99. We are very pleased with this progress,” said Zeti.
In regards to concern of low level of occupancy in the area, Zulqarnain said PNB is in advanced discussions with a number of domestic and international corporations on being co-anchors effectively into the building, together with PNB.
He highlighted a significant portion of the higher floors will be taken up by the Park Hyatt that will open next year.
For financial year ended Dec 31, 2020, the fund’s assets under management grew 3.4% to RM322.6 billion from RM312 billion reported for the preceding financial year. This was driven by the 4% growth in units in circulation for all 15 funds to 264 billion units, as it welcomed more than 200,000 new account holders during the year, taking the total number to 14.5 million.
She said that 2020 was the most tumultuous year in its history but significant payoffs were gained from the transformative strategies that were implemented since 2018.
As a result the fund disbursed RM11.1 billion in income distribution and bonuses in 2020. This amount takes its total cumulative income distribution since inception to RM211.3 billion, a 5.5% increase from the preceding year’s RM200.2 billion.