Malaysian SWF’s new London ventures

Khazanah’s investments to focus on technology-enabled sector in Europe

Khazanah Nasional, Malaysia’s sovereign wealth fund (SWF), has created a European entity and opened an office in London as it plans to increase its exposure to developed markets.

The institution, which is headquartered in Kuala Lumpur’s Petronas Twin Towers with regional offices in Beijing, Mumbai, San Francisco and Istanbul, has taken up its new residence at The Shard, the tallest building in western Europe.

London is a natural choice for many of the SWFs because of the number of asset managers and private equity firms that are based out there, and it covers the whole EMEA region,’ explains Michael Maduell, president of the Sovereign Wealth Fund Institute, to IR Magazine.

The new office – headed by Javier Santiso, Telefónica’s former managing director of global affairs and new ventures – should provide a platform to enhance business and technology links between Malaysia and Europe as new ventures will concentrate on ‘technology-enabled sectors,’ Khazanah says in a statement.

The SWF, which had 16.5 percent of its total assets of MYR144 bn ($33 bn) allocated to overseas investments as of June 2015, focuses mainly on its domestic market as well as China, India and the US, according to the Straits Times. In 2014 it spent MYR1.38 bn to bail out the country’s airline after two of its flights crashed in the same year.

‘A lot of the Malaysia-based pension funds and entities are actually mandated by the government to invest in their home country market, so they’ve been selling off non-core assets and putting that money back into Malaysian equities,’ Maduell says. ‘If you look at the large holders of a lot of major stocks, it’s pretty much wealthy Malaysian families or Malaysian state funds.’

The move comes as another state fund, 1Malaysia Development (1MDB), has been at the center of a scandal since July 2015, when it was revealed that $700 mn was transferred from the debt-ridden fund to the personal accounts of prime minister Najib Razak. An additional $1.4 bn has also gone missing. Investigations of 1MDB continue, though Najib was cleared by Malaysia’s anticorruption agency, which claimed the sums were donations from the Middle East.

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