KUALA LUMPUR (Sept 21): Kumpulan Wang Persaraan (Diperbadankan) (KWAP) recorded total unaudited gross investment income of RM3.8 billion in the seven-month period ended July 2023, said KWAP chief investment officer Hazman Hilmi Sallahuddin.

Gross fund size of the civil servant retirement fund stood at RM184.5 billion at end-July, Hazman said during the launching of a new fund called Dana Perintis on Thursday.

The fund's last annual report was for the financial year ended Dec 2020. In that year, it recorded a gross investment income of RM6.81 billion, up 12.2% from RM6.07 billion in 2019, with a fund size of RM153.82 billion, up 4.3% from RM147.48 billion.

The return on investment (ROI) in 2020 was 4.4%, which is a marginal improvement compared with 4.39% in 2019.

"As a long-term institutional investor, KWAP has consistently outperformed the long-term return target of 5% to 6% over a 10-year rolling basis.

“And as mentioned last year in our TERAS 5 announcement, we aim to achieve a long-term TWRR (time-weighted rate of return) of 7% from 2025 onwards," said Hazman.

Touching on Dana Perintis, Hazman said the new fund will see KWAP allocate up to RM500 million, and  focus on investments into venture capital (VC) funds and startups in Malaysia.

The fund aims to invest up to RM250 million each into selected Malaysia-focused VC funds; and direct investment into startups over the course of next 18-24 months.

Hazman added that Dana Perintis does not mark the first time KWAP is investing in startups, in fact KWAP has invested in 10 regional VC funds and three direct investments, which include the world number one drone services provider, Aerodyne.

"Against the backdrop of various transformative initiatives, we envision a Malaysian entrepreneurial landscape that thrives, where creativity is nurtured and innovation is encouraged," he added.

According to Hazman, KWAP is looking to invest in up to 10 VC funds, and the majority will be Malaysian funds. The selection criteria will include their past performance, fundraising capabilities and market connections.

Hazman said KWAP is slated to announce the first batch of investment under Dana Perintis in the final quarter this year, and it is estimated that five-to-10 VC funds will be selected and each of them will involve an investment of about RM15-25 million.

“The second strategy, direct investment, again, because this is direct and KWAP is a pension fund, there's a requirement for us to look at managing the risk. We will only do Series B onwards. And for Series B onwards, again, it depends on the size of the company and it could be between RM10-20 million. And so, for that second strategy, we're looking perhaps maybe between 10 to 20 investments in these six [priority] sectors,” said Hazman.

Dana Perintis has a few priority sectors to invest in like the silver economy, food security, education, energy transition, financial inclusion and digital economy. However, it will not be exclusively limited to these industries.