KUALA LUMPUR (July 11): Cash-rich Human Resources Development Corp (HRD Corp) has undergone sweeping leadership changes this year, with a new minister overseeing the agency, a complete revamp of its board plus a new chief executive officer.
The agency's immediate challenge is unwinding the legacy investments tied to put and call options, which the Public Accounts Committee (PAC) had previously described as "risky investments". As at end-2025, the fair value of the related derivatives had widened to a net liability of RM108.31 million.
HRD Corp, which comes under the Ministry of Human Resources and is tasked with administering the Human Resources Development Fund (HRDF), recorded a RM49.7 million operating deficit in 2025, dragged lower by derivative losses and weaker fair value gains on its investments weighed.
Although Human Resources Minister Datuk Seri R Ramanan said HRD Corp has begun reducing its exposure to risky assets and is recovering funds tied to previous investments, unwinding the existing put and call option arrangements may prove challenging — particularly where the agency depends on counterparties to fulfil their contractual obligations.
Over the years, the agency shifted from relatively straightforward investments in bonds and quoted shares to more sophisticated financial instruments, including derivatives and redeemable convertible cumulative preference shares (RCCPS). The structure, while intended to hedge the price risk of equity investments, ultimately exposed HRD Corp to significant downside risks.
Its equity portfolio includes substantial stakes in a number of listed companies, some of which have become increasingly difficult to exit because of weak trading liquidity and the constraints imposed by the put and call option arrangements.
To know more about HRD Corp's investment portfolio, cash reserves, financial derivatives, income and expenditure the past decade, read the full cover story in this week's issue of The Edge Malaysia.
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