Islamic Finance 

Malaysia’s Khazanah made good profits after 14 years investing in Saudi’s utilities

| 15 July, 2019
 Bernama

JULY 15, 2019 | 7:30PM MYT | KUALA LUMPUR

Khazanah Nasional Bhd says it divested its 40 per cent stake in Malaysian Shoaiba Consortium Sdn Bhd for a "healthy profit" as the project was completed and fully operational.

Khazanah said in a statement today that it had achieved commercial objectives of its investment in the consortium.

“In accordance with the consortium’s shareholders agreement, our 40 per cent stake was offered to the existing partners. Malakoff Corp Bhd subsequently took the offer, which allowed Khazanah to exit with a healthy profit at a value based on future cash flows of the project.”

Khazanah had entered into a joint investment with Malakoff and Tenaga Nasional Bhd (TNB) in 2005, to support Malaysia’s entry into Saudi Arabia’s independent water and power producer market.

Malakoff chief executive officer Datuk Ahmad Fuaad Kenali had reportedly said the stake purchase was earnings accretive, thanks to the remaining 10 years of contract under Shuaibah Water & Electricity Co Ltd’s power and water purchase agreement for Shuaibah 3 independent water and power plant.

Khazanah said it assesses all opportunities for divestment against set financial and strategic targets. Assets may be considered for divestment once the intended investment objectives and targeted returns have been achieved.

it said the proceeds from the stake divestment in the consortium, like all other divestments by it, were reinvested or used to repay existing debts on its balance sheet.

Year to date, Khazanah has committed RM1.4 billion in investments and reduced overall debt by RM6.4 billion.

"We expect to undertake more investments in the second half of 2019, based on the opportunities that we are exploring. Divestments may also depend on the strength of the market, as well as the availability, quality and credibility of buyers,” the sovereign wealth fund added.

Copyright New Straits Times

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