Malaysian SWF to hold May London launch – Update

The $37bn Khazanah is setting up in London as it looks to diversify its holdings away from Malaysia, China India and the US.

Malaysian sovereign wealth fund Khazanah Nasional is formally launching its office in London at the end of next week, Private Equity International has learned from Khazanah.

A source with knowledge of the event said Khazanah will be flying in more than 100 people from Malaysia for the launch. Kenneth Shen, executive director of investments at Khazanah, who also sits on the board of portfolio companies Axiata, Yayasan AMIR and Themed Attractions & Resorts, is also in town for the opening.

Plans to establish a London office were announced in July last year, together with the establishment of its wholly-owned subsidiary, Khazanah Europe Investment Limited (KEIL).

The London office is Khazanah’s fifth regional office after Beijing, Mumbai, San Francisco and Istanbul. Javier Santiso, executive director at Khazanah and a former managing director of global affairs and new ventures at Telefonica, will head the office from where he will identify and execute investments in the region.

KEIL’s specific mandate is to target opportunities in technology-enabled sectors in the continent, complementing the acceleration of Malaysia’s innovation agenda and strengthening current collaborations between Malaysia and European countries, especially the United Kingdom.

“The establishment of KEIL will provide a platform to enhance business linkages between Malaysia and Europe and to help accelerate Malaysia's very own innovation and technology capabilities,” Khazanah managing director Tan Sri Dato’ Azman Hj. Mokhtar said in an earlier statement. “European countries provide tremendous potential that Khazanah can tap into especially in diversifying our investments portfolio with developed market risk-return profile.” 

The new office is located in one of London’s tallest buildings, The Shard, which is jointly owned by developer Irvine Sellar and the Qatar Investment Authority.

Khazanah manages over MYR 150 billion ($37 billion; €33 billion) of assets as of 31 December 2015. Its overseas investments represent approximately 16.5 percent of its realisable asset value, it said in a statement.

Khazanah is involved in various sectors such as power, telecommunications, financial institutions, healthcare, aviation, infrastructure, leisure & tourism, property, creative & media, education, and innovation & technology.

Several projects from last year include Malaysia Airports Holdings’ 100 percent acquisition of Istanbul Sabiha Gokcen International Airport, IHH Healthcare’s acquisition of Indian hospitals Continental Hospitals and Global Hospitals, Tenaga Nasional’s acquisition of Turkish power company Gama Enerji and the UEM Group Bhd subsidiary PLUS Expressways International’s completion of the Cikopo-Palimanan toll road in Indonesia. In 2014 it spent MYR1.38 billion to bail out the country’s airline after two of its flights crashed in the same year.

In other news, the Khazanah is reportedly offloading its stakes in power producer Tenaga Nasional, hospital operator IHH Healthcare and wireless operator Axiata in a sale that could amount to $897 million. The sovereign wealth fund had also recently invested $100 million in US data analytics company Fractal Analytics to accelerate its growth.