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Khazanah Nasional Berhad is the
sovereign wealth fund A sovereign wealth fund (SWF), sovereign investment fund, or social wealth fund is a state-owned investment fund that invests in real and financial assets such as stocks, bonds, real estate, precious metals, or in alternative investments such ...
of the
Government of Malaysia The Government of Malaysia, officially the Federal Government of Malaysia ( ms, Kerajaan Persekutuan Malaysia), is based in the Federal Territory (Malaysia), Federal Territory of Putrajaya with the exception of the legislative branch, which is l ...
, entrusted with growing the nation's long-term wealth via distinct
commercial Commercial may refer to: * a dose of advertising conveyed through media (such as - for example - radio or television) ** Radio advertisement ** Television advertisement * (adjective for:) commerce, a system of voluntary exchange of products and s ...
and strategic objectives. Khazanah's commercial objective is to grow
financial assets A financial asset is a non-physical asset whose value is derived from a contractual claim, such as bank deposits, bonds, and participations in companies' share capital. Financial assets are usually more liquid than other tangible assets, such as ...
and diversify
revenue In accounting, revenue is the total amount of income generated by the sale of goods and services related to the primary operations of the business. Commercial revenue may also be referred to as sales or as turnover. Some companies receive reven ...
sources for the
nation A nation is a community of people formed on the basis of a combination of shared features such as language, history, ethnicity, culture and/or society. A nation is thus the collective identity of a group of people understood as defined by those ...
, while its strategic objective is to hold strategic assets that bring long-term economic benefits. Khazanah is guided by its
investment Investment is the dedication of money to purchase of an asset to attain an increase in value over a period of time. Investment requires a sacrifice of some present asset, such as time, money, or effort. In finance, the purpose of investing i ...
philosophy Philosophy (from , ) is the systematized study of general and fundamental questions, such as those about existence, reason, knowledge, values, mind, and language. Such questions are often posed as problems to be studied or resolved. Some ...
which emphasises attaining appropriate risk-adjusted financial returns, generating sustainable returns, and integrating ethical and responsible investing considerations. Khazanah is a member of the
International Forum of Sovereign Wealth Funds The International Forum of Sovereign Wealth Funds (IFSWF) is a nonprofit international group of sovereign wealth funds managers which was established in 2009. It is based in London, England. History In 2009, a group of 23 leading state-owned in ...
, which maintains and promotes the
Santiago Principles The Santiago Principles or formally the Sovereign Wealth Funds: Generally Accepted Principles and Practices (GAPP) are designed as a common global set of 24 voluntary guidelines that assign best practices for the operations of Sovereign Wealth Fund ...
on best practices in managing sovereign wealth funds. It is also a signatory of the
United Nations The United Nations (UN) is an intergovernmental organization whose stated purposes are to maintain international peace and international security, security, develop friendly relations among nations, achieve international cooperation, and be ...
-supported
Principles for Responsible Investment Principles for Responsible Investment (UNPRI or PRI) is a United Nations-supported international network of financial institutions working together to implement its six aspirational principles, often referenced as "the Principles". Its goal is to u ...
(UNPRI), signatory of the Malaysian Code for Institutional Investors and a member of the Institutional Investor Council Malaysia (IIC), member of FCLTGlobal (Focusing Capital on the Long Term), and signatory of the Malaysian Anti-Corruption Commission's (MACC) Corporate Integrity Pledge. Khazanah was incorporated under the Companies Act 2016 in Malaysia on 3 September 1993 as a
public limited company A public limited company (legally abbreviated to PLC or plc) is a type of public company under United Kingdom company law, some Commonwealth of Nations, Commonwealth jurisdictions, and the Republic of Ireland. It is a limited liability company ...
and commenced operations a year later. Khazanah is owned by the Malaysian government and administered by the
Minister of Finance A finance minister is an executive or cabinet position in charge of one or more of government finances, economic policy and financial regulation. A finance minister's portfolio has a large variety of names around the world, such as "treasury", " ...
Incorporated, except for one share held by the Federal Land Commissioner. It is governed by a
board of directors A board of directors (commonly referred simply as the board) is an executive committee that jointly supervises the activities of an organization, which can be either a for-profit or a nonprofit organization such as a business, nonprofit organiz ...
comprising representatives from the Government and the
corporate A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal context) and re ...
sector with diverse professional backgrounds and expertise. In December 2021 the fund had US$ 30.5 billion in assets under management.



Financial highlights

In 2020, Khazanah achieved a profit from operations of RM2.9 billion compared to RM7.4 billion in 2019. Dividend income from investee companies rose to RM5.2 billion from RM3.8 billion but was offset by lower divestment gains of RM2.7 billion compared to RM9.9 billion in 2019. Khazanah declared a dividend of RM2.0 billion for 2020. Khazanah’s financial position remained strong with debt reduced by 6% to RM43.1 billion from RM45.8 billion in 2019, while Realizable Asset Value (RAV) cover stood at 2.9 times. Meanwhile, operating expenses rose 1.0% to RM490 million from RM484 million in 2019. 2020 operating expenses include a RM20 million contribution to support the Government's COVID-19 relief efforts. The Commercial Fund’s Realizable Asset Value (RAV) stood at RM95.3 billion, whilst the Strategic Fund’s RAV was at RM27.9 billion, as at 31 December 2020.


History


Incorporation

Khazanah was incorporated under the Companies Act 2016 on 3 September 1993 as a public limited company and commenced operations a year later. Except for one share owned by the Federal Land Commissioner, all the share capital of Khazanah is owned by the Minister of Finance Incorporated, a body incorporated pursuant to the Minister of Finance (Incorporation) Act 1957.


A refreshed mandate

In 2018, the Government of Malaysia initiated a corporate restructuring and reorganisation of Khazanah, which involved leadership changes, a refresh of its mandate and objectives, and a review and revaluation of its investments. Khazanah's mandate is to grow Malaysia's long-term wealth. Grow in this context is to sustainably increase the value of investments while safeguarding financial capital injected into the fund. Long-term refers to a period spanning generations and focuses on ensuring future generations’ ability to meet their needs. Wealth refers to the value of Khazanah's financial assets and economic development outcomes for the nation. To achieve the mandate, Khazanah pursues the following investment objectives: * Commercial objective - Achieve optimal risk-adjusted returns, to grow financial assets and diversify sources of revenue for the nation. * Strategic objective - Undertake strategic investments with long-term economic benefits for Malaysia or Malaysians, including holding strategic national assets


Leadership and governance

;Board of directors Khazanah is governed by its board of directors, which is led by Dato' Sri Ismail Sabri Yaakob, Prime Minister of Malaysia, as chairman of the board. The board members comprise representatives from the Government as well as the corporate sector with diverse professional backgrounds and expertise. The managing director reports to the board. The board meets regularly and is ultimately accountable and responsible for Khazanah's overall governance and performance. A ''Board Charter'' sets out the roles and responsibilities of the board in overseeing the management of Khazanah. Khazanah is guided by a framework that establishes a responsibility, authority and governance structure. Its ''Governance and Risk Management Framework'' comprises a ''Risk Management Policy'', ''Schedule of Matters for the Board'', ''Limits of Authority'' for the management, ''Code of Conduct'' for employees, and operational ''Policies and Procedures''. ; ;Board members Chairman: * Dato' Sri Ismail Sabri Yaakob, Prime Minister of Malaysia Directors: * Dato' Sri
Mohamed Azmin Ali Mohamed Azmin bin Ali ( Jawi: محمد عزمين بن علي; born 25 August 1964) is a Malaysian politician who served as Senior Minister of the Economic Cluster and as Minister of International Trade and Industry from 2020 to 2022. A memb ...
, Senior Minister of International Trade and Industry of Malaysia *Tengku Datuk Seri Utama Zafrul Tengku Abdul Aziz, Minister of Finance of Malaysia * Mr. Goh Ching Yin, Chairman of Executive Committee (EXCO), Member of Audit & Risk Committee (ARC) and Member of Nomination & Remuneration Committee (NRC) *Tan Sri Mohammed Azlan Hashim, Chairman of Nomination & Remuneration Committee (NRC) and Member of Executive Committee (EXCO) *Dato’ Zainal Abidin Putih, Chairman of Audit & Risk Committee (ARC) *Mr. Lau Seng Yee, Member of Executive Committee (EXCO) and Member of Nomination & Remuneration Committee (NRC) *Datuk Azian Mohd Aziz, Member of Audit & Risk Committee (ARC) *Dato’ Amirul Feisal Wan Zahir, Managing Director of Khazanah Nasional and Member of Executive Committee (EXCO) ; ;Management team * Managing Director – Dato’ Amirul Feisal Wan Zahir * Chief Investment Officer – Tengku Dato’ Sri Azmil Zahruddin Raja Abdul Aziz * Executive Director, Head, Corporate & Support Services, Company Secretary and Head, Legal – Dato' Mohamed Nasri Sallehuddin * Executive Director and Chief Financial Officer – Faridah Bakar Ali *Executive Director and Head, Strategic Human Capital Management – Latifah Daud *Executive Director and Head, Governance, Risk & Compliance – Suhana Dewi Selamat *Executive Director and Head, Public Markets – Hisham Hamdan *Executive Director and Head, Private Markets and Head, Financial Institutions Group (FIG) – Serena Tan Mei Shwen * Executive Director and Head, Energy, Iskandar, Leisure & Tourism – Datuk Amran Hafiz Affifudin *Executive Director and Head, Dana Impak and Head, Healthcare – Bryan Lim *Executive Director and Head, Telecommunications, Media & Technology - Geoff Lee Seng Chow *Head, Infrastructure & Airlines - Wong Shu Hsien * Head, Real Assets - Selvendran Katheerayson *Head, Chief Investment Officer's Office - Dr. Farid Mohamed Sani *Head of Consumer and Lead, Southeast Asia PE - Effizal Faiz Zulkifly *Director, Telecommunications & Media - Ong King How *Head, Strategy - Nik Sharifidin Nik Mohamed Din *Head, Research - Nicholas Khaw


Investments

Khazanah pursues its overall mandate through a two-fund investment structure. The two funds, the Commercial Fund and the Strategic Fund, are established with distinct objectives, policies and strategies, and are managed separately via separate investment management divisions.


Commercial Fund

The Commercial Fund is an inter-generational fund that seeks to generate risk-adjusted returns on a long-term basis, to grow financial assets and diversify sources of revenue for the nation. The Fund targets to generate a return of at least the Malaysian Consumer Price Index plus 3% on a 5-year rolling basis with a moderate risk tolerance level as follows: * underperformance no more than 10% chance of a 30% annual loss * funding no more than 10% chance of not achieving 1.5% portfolio yield. The return target and risk tolerance are set by the Board and may be reviewed from time to time. The annual returns of the Fund are reinvested into the Fund and distributed to the Government based on an identified payout ratio. Any additional inflow of capital will be subject to approval of the Board. The Fund has the flexibility to invest across multi-asset classes in accordance to the strategic asset allocation and different geographies with a preference for active and direct investment strategies.


Strategic Fund

The Strategic Fund is a developmental fund that seeks to undertake strategic investments, with long-term economic benefits, including holding strategic national assets. It targets to generate a return of at least the yield of the 10-year Malaysian Government Securities on a 5-year rolling basis, and to achieve its strategic objectives. Its return target is set by the Board and may be reviewed from time to time. The Fund aims to be self-sustaining, with the primary source of funding for the Fund's activities to be generated from any internal surplus; any additional capital required above this available amount will be subject to the approval of the Board. The Fund invests and manages strategic assets as defined and classified below: * Strategic assets - Domestic assets of national importance, such as critical infrastructure. > Held on behalf of the Government of Malaysia for the long-term. * Developmental assets - Long-term developmental investments with potential to deliver high economic impact. > These assets will be developed to achieve commercial viability at which point value realisation options may be considered. * New strategic assets - Either national infrastructure related or developmental in nature with clearly defined economic benefit targets and commercial viability plan identified. The Fund pursues opportunities with the potential to become commercially viable or earn sufficient returns to operate without recourse to its shareholders. Larger-value transactions will generally be undertaken by the Fund, with the flexibility to invest across capital structures and a preference for co-investment and partnerships in entering all new developmental investments. Value realisation options can be considered when possible, on a commercial arm's-length basis. The investment themes of the Fund are reviewed on a regular basis based on global economic megatrends and national needs, and investment assets within the portfolio are similarly reviewed and assessed for relevance to strategic targets.


References

{{authority control 1993 establishments in Malaysia Government-owned companies of Malaysia Sovereign wealth funds Ministry of Finance (Malaysia) Privately held companies of Malaysia