KUALA LUMPUR: Khazanah Nasional Bhd has set its sights on increasing its portfolio investment in the technology sector, which made up 4% of its portfolio in 2016, according to the national strategic investment fund’s managing director (MD) Tan Sri Azman Mokhtar.

At a press conference last Friday, Azman said the Malaysian government’s ambition is visible in facilitating a digital economy as there are a lot of initiatives circling the vision.

“We do support technology sector where appropriate, but the key part is that we need to know our respective roles as an investment hub. We have our own network with companies or researchers in this line. We are part of the ecosystem, but we have our dedicated role, like MavCap (Malaysia Venture Capital Management Bhd) and MaGIC (Malaysian Global Innovation & Creativity Centre),” Azman said.

Within the technology space, Khazanah is currently invested in 24 companies globally, of which 15 are direct investments like Infosys Ltd, while the remaining indirectly held investments are in Uber Technologies Inc and Airbnb Inc.

“We were new to technology investment earlier, so we invested into a fund called General Atlantic, which invested into Uber and Airbnb,” he said.

Meanwhile, Azman also said Khazanah would continue to further divest its stake in government-listed companies while developing its international offices in London, Turkey and San Francisco.

“Khazanah will continue to drive long-term value creation [and] further develop a high quality, resilient portfolio,” he said, adding that they would focus on ensuring growth and job creation.

Khazanah will “not get distracted” by short-term volatility while ensuring its portfolio does not take on excessive risk, Azman said.

“We cannot control the sea but we can control the ship,” he said.

“Our mandate demands that we pioneer work overseas but at the same time, we have to balance it with domestic investments, particularly in catalytic investments,” Azman added, answering a concern over Khazanah’s foreign exchange exposure.

On the ringgit, he agreed with market talk that the currency is undervalued by 10% to 12%.

Azman said Khazanah was ready to deploy RM1 billion for ValueCap, an equity fund that aims to increase liquidity in small- and mid-cap companies. In 2015, Prime Minister Datuk Seri Najib Razak announced the federal government would inject RM20 billion into the fund, which was initiated in 2002.

Azman added that Khazanah is not against listing some of its more profitable outfits such as Themed Attractions and Resorts, which has seen the development of Legoland, among others, and Cenviro Sdn Bhd, a toxic waste management firm which has been “growing well”.

However, he added that they “don’t want to list too early”, saying that new listings in 2017 were unlikely.

“It depends on the readiness of the companies and the market,” Azman said.

Khazanah also announced last Friday that its profit before tax grew by 32.18% to RM1.56 billion from RM1.18 billion in 2015.

However, its portfolio net worth adjusted (NWA) declined slightly, posting an unrealised decline of 6.4% to RM101.9 billion as at Dec 31, 2016, from RM108.9 billion in 2015.

This was in line with weakness in most benchmark equity markets and currencies, Azman said.

Meanwhile, Khazanah declared a lower dividend of RM650 million in 2016 compared with RM1.05 billion in 2015.

In a statement last week, Khazanah disclosed that its shareholders’ fund grew by 1.99% to RM37.08 billion in 2016, from RM36.35 billion in 2015.

The sovereign wealth fund said the long-run value creation trend remains “strong” with NWA up by 3.1 times or a compounded annual growth rate of 9.3% per annum, for the period of May 2004 to Dec 31, 2016.

“Many risk management and prudential measures have been put in place over the years, resulting in a strong and resilient portfolio which allows us to ride short- and even medium-term volatility, and continue focusing on long-term value creation,” he said.

As at Dec 31, 2016, Khazanah’s assets and liabilities stood at RM145 billion and RM49 billion respectively. This worked out to an asset cover of 2.9 times and down to the 2014 level after the group posted an asset cover of 3.1 in 2015.

Meanwhile, Azman said Khazanah would also continue investing in aviation as Malaysia Airlines Bhd, which it took private in 2014, was slightly ahead in the progress of its five-year recovery plan.

“For 2016, we [expect] Malaysia Airlines to announce smaller-than-expected losses,” Azman said. So far, Khazanah has spent over RM5 billion in the turnaround of the loss-making airline, of which RM3.6 billion had been provided for in the fund’s account.