Tuesday, February 17, 2015

MALAYSIA:::Malaysia’s EPF commits to $390 million logistics JV

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Malaysia’s Employees Provident Fund (EPF), one of the world’s largest managers of retirement savings, will jointly invest 1.4 billion ringgit (US$390 million) in developing domestic logistics assets over the next three years.

The EPF, which manages about 636.53 billion ringgit, said it had entered into a 50:50 joint venture (JV) with Australian firm Goodman Group to tap into demand for modern warehousing facilities among local businesses.

The retirement fund said that the decision to establish the JV was in line with its recent investment diversification strategy, through which it is seeking to strategically allocate a higher proportion of its portfolio to inflation-linked assets. The requirement for the fund to diversify is heightened by pressure to maintain dividends for EPF members, as well as low bond yields and a limited pool of assets to invest in domestically.

“These asset classes [are] effective inflation hedging tools, befitting the fund’s long-term objectives as a retirement fund, and the EPF would continue to explore opportunities in real estate, infrastructure and natural resources in accordance with its strategic asset allocation,” commented Mohamad Nasir Ab Latif, the EPF’s deputy chief executive officer for investment.

This is the third such collaboration the EPF has formed with the Down Under infrastructure specialist. The first, three years ago, focussed on Australia and had capital of A$500 million (US$389 million); the second, a year later, had capital of 500 million euros (US$571 million) and was focussed on Germany.

As of the end of 2014, real estate and infrastructure assets made up 3.01% of the EPF’s total investment portfolio. These assets contributed 1.39 billion ringgit in investment income for the year.

For the most recent calendar year, the EPF declared a dividend rate of 6.75%, up from 6.35% in 2013.

However, the head of the fund, Tan Sri Samsudin Osman, has expressed concerns over the short-term outlook for both domestic and global markets, in light of a recent collapse in oil prices and a deflationary outlook in a number of major developed markets.

Meanwhile, the EPF deal is the latest deepening of ties between Goodman and a heavyweight global institutional investor. In recent months, the group has strengthened ties or jumped into bed with pension funds including the Canada Pension Plan Investment Board and sovereign wealth fund GIC Private.


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