Khazanah Nasional

Khazanah was incorporated under the Companies Act 1965 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.

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.[3] The leadership changes saw the appointment of Datuk Shahril Ridza Ridzuan as managing director.[4]

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 will pursue 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

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 will be 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.

The Strategic Fund is intended to be 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 achieve its strategic objectives. Its return target is set by the Board and may be reviewed from time to time.

The Fund intends 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 will invest and manage 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 will pursue opportunities with the potential to become commercially viable or will earn sufficient returns to operate without recourse to its shareholders. It is anticipated that larger-value transactions will generally be undertaken by the Fund. It has the flexibility to invest across capital structures. There is a preference for co-investment and partnerships in entering all new developmental investments. Value realisation options can be considered when possible, on commercial arms’ length basis. The investment themes will be reviewed on a regular basis based on global economic megatrends and national needs, and investment assets within the portfolio will be similarly reviewed and assessed for relevance to strategic targets.