Malaysia’s EPF eyes direct natural resources investments in bid to diversify | Reuters


KUALA LUMPUR, April 20 Malaysia’s Employees
Provident Fund (EPF) is mulling direct investments in plantation
and forestry assets to diversify its holdings and beef up its
portfolio of long term assets, the chief executive of the state
pension fund said on Thursday.

EPF CEO Shahril Ridza Ridzuan said the move to seek exposure
to hard assets in the natural resources sector is part of its
strategy to actively diversify from fixed income and public

“In the last few years, you saw us expand primarily in real
estate and infrastructure, and we have done several transactions
in those spaces especially in the infrastructure sector in
Malaysia,” he said.

Real estate and infrastructure now make up 4 percent of
EPF’s total investment assets valued at 731 billion ringgit
($166.19 billion) at end-2016.

He said the pension fund is considering direct exposure
in the plantation sector for the “reduced volatility”.

EPF is a significant equity shareholder in Sime Darby Bhd
, which runs the world’s largest palm oil operation by
land size, holding a 9.83 percent stake, as at April 13,
according to Thomson Reuters Data.

“Already we are one of the largest investors in palm oil
production. We have been looking at the prospects of potentially
taking a more direct exposure – not just through the businesses
but directly owning or controlling some of these planted
assets,” he said at a briefing to unveil the fund’s 2016 annual

However, the fund divested completely from its equity stake
in Felda Global Ventures Holdings Bhd, the world’s
third largest palm plantation group, in December, citing efforts
to practice high standards of corporate governance and to manage

The EPF is also taking a page from the investment playbook
of its foreign counterparts, considering opportunities in the
sustainable forestry space.

“(There is) a trend among our global
counterparts…investing in renewable forests (and) farmlands.
(It is) yet to be seen whether that is something suitable for
us…but I think this is a direction to achieve, in which lot of
the pension funds of the world are moving,” Shahril said.

EPF recorded a gross investment income of 46.56 billion
ringgit ($10.59 billion) in 2016, a 5.3 percent improvement from
a year ago. However, gross return on investment dipped 36 basis
points to 7.12 percent.
($1 = 4.3960 ringgit)
(Reporting by Liz Lee; Editing by Muralikumar Anantharaman)