Malaysia’s sovereign wealth fund Khazanah Nasional on April 15 raised 312 million ringgit (US$75.54 million) from a placement of Telekom Malaysia shares as part of its ongoing efforts to rebalance its portfolio.
Khazanah sold 53.8 million shares in Telekom Malaysia at 5.80 ringgit each, representing a 3% discount to the closing market price of 5.98 ringgit on April 14. The shares were placed out to a pool of domestic long-only institutional investors, as well as multi-strategy institutional investors, with the bulk of investors being domestic long-only.
With the strong share price recovery and demand for Telekom Malaysia shares underpinned by the digital transformation initiatives under the government of Malaysia’s digital economy blueprint, the placement provides Khazanah with the opportunity to partially monetize its investment in the company, which will further increase the free float and attractiveness of Telekom Malaysia shares. Following the placement, Khazanah’s stake in Telekom Malaysia will stand at 20.1%.
In rebalancing its portfolio, Khazanah is recycling its investments from existing assets into new assets, including those that it describes as strategic to the country’s future. In this regard, proceeds from the placement will be utilized for new investments, including investments in new strategic sectors that can help to spur Malaysia’s economic growth and create new high-skilled jobs.
Credit Suisse and CIMB were the joint bookrunners for the share placement.
Khazanah previously sold shares in Telekom Malaysia in May 2020, in which it raised 735.7 million ringgit. It placed a total of 172.3 million shares at 4.27 ringgit per share, which then represented a 3.61% discount to the previous closing price.
Khazanah’s profitability suffered in 2020 on the back of the volatility in global financial markets and an unfavourable economic environment brought about by Covid-19. Its profit from operations fell to 2.9 billion ringgit last year compared to 7.4 billion ringgit in 2019. Amid the profit decline, however, Khazanah declared a dividend of 2 billion ringgit to the government of Malaysia.
Dividend income from investee companies rose to 5.2 billion ringgit from 3.8 billion ringgit, but it was offset by lower divestment gains of 2.7 billion ringgit, against 9.9 billion ringgit in 2019.
The impact of the pandemic led to higher impairments of 6 billion ringgit, particularly in aviation and hospitality assets, compared to 4.9 billion ringgit in the previous year. Khazanah’s financial position remained strong with debt reduced by almost 6% to 43.1 billion ringgit in 2020 from 45.8 billion ringgit in the previous year.