Khazanah Nasional

Khazanah was incorporated under the Companies Act 2016 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.

Khazanah's mandate today is investing to deliver sustainable value for Malaysians. The mandate is to be achieved by pursuing commercial investments to preserve and grow long-term value of our assets, as well as undertaking investments that deliver economic or societal returns for the nation.

The Investments Portfolio is intended to be an intergenerational portfolio that seeks to generate risk-adjusted returns on a long-term basis, to preserve and grow the long-term value of our assets. The portfolio targets to generate a return of at least the Malaysian Consumer Price Index + 3% on a 5-year rolling basis. The Investments Portfolio’s return target is set by the Board and may be reviewed from time to time. The annual returns of the Investments Portfolio will be reinvested into the Fund and distributed to the Government based on the payout framework approved by the Board.  

The Investments Portfolio has the flexibility to invest across different geographies and asset classes in accordance with the strategic asset allocation.

The Dana Impak Portfolio is intended to invest in increasing Malaysia’s economic competitiveness and in building national resilience while delivering socioeconomic impact for Malaysians. The portfolio 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 societal benefits and outcomes. The aforementioned returns target and pre-determined societal benefits and outcomes are set by the Board and may be reviewed from time to time.

The portfolio will invest and manage the assets according to investment themes for the benefit of the nation. The investment themes will be reviewed on a regular basis based on global economic megatrends and national priorities, taking into account Khazanah’s available resources and alignment with Khazanah’s mandate.

The Developmental Assets is intended to deliver high economic impact through long-term developmental investments. These assets will be developed to achieve commercial viability at which point value realisation options may be considered.

The assets are subjected to the target of generating a return of at least the yield of the 10-year Malaysian Government Securities on a 5-year rolling basis and achieve its relevant national and/or societal benefits and outcomes. The aforementioned return target is set by the Board and may be reviewed from time to time.

Special Situations Assets are defined and classified as assets that require turnarounds in terms of profitability and sustainable operating cash flows. These assets will have specific targets and action plans that are approved by the Board on an annual basis.  

These assets may be reclassified when they achieve commercial viability or undertakes a process to explore value realisation options upon approval of the Board.

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

The Fund aims 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 invests and manages 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 pursues opportunities with the potential to become commercially viable or earn sufficient returns to operate without recourse to its shareholders. Larger-value transactions will generally be undertaken by the Fund, with the flexibility to invest across capital structures and a preference for co-investment and partnerships in entering all new developmental investments. Value realisation options can be considered when possible, on a commercial arm's-length basis. The investment themes of the Fund are reviewed on a regular basis based on global economic megatrends and national needs, and investment assets within the portfolio are similarly reviewed and assessed for relevance to strategic targets.