Malaysia’s biggest state-backed asset manager eyes European push

Permodalan Nasional Berhad is bullish on Europe and is in talks with overseas private equity managers, according to the organisation’s group chief executive.

Permodalan Nasional Berhad or the National Equity Corporation, Malaysia’s largest government-linked asset manager by assets under management, is looking at investing in European private equity as it seeks to diversify its mainly domestic portfolio.

Dato’ Abdul Rahman Ahmad, president and group chief executive of PNB, told Private Equity International that the investor is heavily overweight on domestic investments – mostly investments in listed companies – and is seeking to ramp up its overseas exposure.

“We are relatively bullish on [the] European private equity market given [its] scope for growth and reasonable valuation,” Ahmad said on the sidelines of the Credit Suisse Asian Investment Conference in Hong Kong in mid-March. PNB is in talks with overseas fund managers about the shift in strategy, he added.

“Increasing our overseas exposure is part of the overall strategy to diversify our portfolio and optimise our asset allocation,” Ahmad noted. “It’s important for us to be able to leverage on the different risk and return profiles of equity markets across the globe. However, this will be done gradually and judiciously, when and where good opportunities arise.”

PEI understands PNB’s short to medium-term focus in Asia is on markets such as China and Korea. In addition, it will monitor the long-term developments and potential investments in South-East Asian countries

PNB launched a five-year strategic plan in November 2016, in which one of the key initiatives is to boost its private equity exposure from the current 1.8 percent to between 5 percent and 7 percent by 2022.

PNB manages 279 billion Malaysian ringgit ($71 billion; €58 billion) of assets primarily for the Malaysian public under its unit trust operations.

It invests in venture capital and growth capital funds through PNB Equity Resource Corporation (PERC), its investment arm established in 1990. PERC focuses on growth technology-based companies in sectors such as information and communication technology, biotechnology, healthcare and clean technology, according to PNB’s website.

Its joint venture partners include Burrill & Company, a San Francisco-based life sciences private equity firm; SBI Holdings, a SoftBank asset management company; and Zouk Ventures, a London-based venture capital firm.

In addition to fund commitments PNB is a major shareholder of domestic companies spanning a variety of industries spanning property and infrastructure, banking, transport, energy and hospitality. Its portfolio includes Maybank, Sime Darby and the UMW Group.