Lembaga Tabung Angkatan Tentera chief executive officer Mohammad Ashraf Md Radzi says the fund is looking to beef up its fixed-income asset allocation to 20%-25%, while considering private equity funds rather than its current direct investment in private equity. (Photo by Sam Fong/The Edge)
KUALA LUMPUR (March 27): Lembaga Tabung Angkatan Tentera aims to trim its strategic assets to 35% of its total holdings over the next three years under the Project Earth restructuring plan.
Strategic assets account for 56% of the RM13.6 billion under management, and getting to the target may also include potential relisting on top of disposals, according to the Armed Forces Fund Board’s chief executive officer Mohammad Ashraf Md Radzi.
The relisting of Boustead Plantations Bhd is as a possible example, he said while stressing that the fund, better known by its Malay acronym LTAT, must not be forced into a fire sale.
Project Earth involves restructuring of LTAT and its flagship company Boustead Holdings Bhd amid serious financial concerns. A bipartisan parliamentary committee in November 2024 warned that Boustead’s cash flow crisis and other challenges could erase up to half of LTAT’s funds.
Assets considered strategic comprise Boustead Holdings Bhd, which LTAT wholly owns, a 54.9% stake in Pharmaniaga Bhd (KL:PHARMA), and 22% of Affin Bank Bhd (KL:AFFIN). LTAT and Boustead together sold nearly 27% of their stakes in Affin Bank to Sarawak last year to help cut debt.
"Whatever we transact or monetise, it allows us to take back the capital invested in these companies in a structured manner at the value it is supposed to be and reinvest them into other asset classes that we are lacking," Mohammad Ashraf said when announcing LTAT's dividend of 5.25% for 2024 on Thursday.
Apart from reducing LTAT’s strategic holdings, the other two objectives of the revised restructuring plan involve building a positive gap between the fund’s cost of investment in strategic assets against their fair value, as well as getting sustainable competitive dividends from strategic assets.
Beyond strategic assets, LTAT’s portfolio comprises real estate at 11.8%, public equity at 9.4%, fixed-income at 9.3%, private equity at 7.8%, and cash and money market instruments at 5.8%.
Mohammad Ashraf said the fund is looking to beef up its fixed-income asset allocation to 20%-25%, while considering private equity funds rather than its current direct investment in private equity.
Last year, LTAT's strategic assets produced a return on investment of 5.63%, followed by real estate at 3.91%, public equity at 6.2%, fixed-income at 4.97%, and private equity at 13.79%. Overall, the fund's blended return was 5.82% for 2024.
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