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Khazanah as an SWF and industrial policy Friday 6 June 2014

Khazanah as an SWF and industrial policy Friday 6 June 2014. Khazanah’s House Chart sets out our scope of activities. Source: Khazanah analysis. ILLUSTRATIVE. The political economy continues to swing between state and market. “Political Economy Balance” – State vs Markets.

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Khazanah as an SWF and industrial policy Friday 6 June 2014

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  1. Khazanah as an SWF and industrial policy Friday 6 June 2014

  2. Khazanah’s House Chart sets out our scope of activities Source: Khazanah analysis

  3. ILLUSTRATIVE The political economy continues to swing between state and market “Political Economy Balance” – State vs Markets (Not-to-scale) Source: Khazanah analysis; “In Search of Gold and the Golden Mean” speech at Invest Malaysia April 2011

  4. Steady growth in portfolio value with acceptable level of risk Note 1: Based on unaudited 2013 accounts Note 2: RAV: Market value of all equities, securities and cash held. Where no market price is available, a conservative estimate of value is used. Note 3: NWA: RAV less Total Liabilities and adjusted to measure value created Note 4: Compounded Annual Growth Rate Source: Khazanah analysis

  5. Whilst still largely domestic focused, we continue to gradually expand our regional exposure RAV by domicile of companies RAV by geographic exposure1 Note 1: An estimate of attributable value according to the countries where investee companies have operations Source: Khazanah analysis

  6. SOEs have outperformed the rest of the market, underpinned by fundamental improvements We are here 2004 2005 2006 2007 2010 2015 Phase 1: Mobilisation, Diagnosis & Planning Phase 2: Generate Momentum Phase 3: Tangible Results Phase 4: Full National Benefit 5-10 years onwards 12-17 months 14 months 2-5 years 5/2004 1/2005 PCG formed 29th July 2005 Transformation Manual Launch 2004 Measures • KPI and PLCs • Performance contracts • Board composition reform • Revamp of Khazanah • GLC leadership changes • Policy Guidelines • Ten 2005/6 Initiatives Targeted outcomes: • Maintain momentum • Tangible & sustained benefits across GLCs • Visible benefits to all stakeholders, e.g., customers, vendors, employees, etc. • Large scale strategic and financial changes made • Material changes to Boards • Several regional champions • Most GLCs performing at par with competitors • Diagnosis of GLCs conducted • Determination of Policy Principles • Initial 2004 Initiatives launched • 2005/6 Initiatives implemented • Full roll-out in place • Key policies endorsed and executed upon • Early fruits of sustainable improvements Source: Bloomberg; companies’ financial reports; analyst consensus estimates for 2013; PCG analysis; Khazanah analysis

  7. SOEs have been restructured via transformative transactions … • Investment into Lippo Bank and subsequently Bank Niaga in Indonesia to support CIMB’s regionalisation strategy • Today, the group has over 1,000 branches and 40,000 employees across 17 countries • Demerger of TM and Axiata in 2008 to allow both companies to focus on core growth strategies • TM’s HSBB offering has reached more than 665,000 customers across Malaysia whilst Axiata has 215m subscribers across Asia • Merger of UEM Land and Sunrise to form Malaysia’s largest property developer by market capitalisation • Synergistic transaction to leverage UEM Land’s landbank and Sunrise’s expertise in luxury property development • Consolidation of regional healthcare players to form the world’s second largest private healthcare group • Recently listed in both KL and Singapore to overwhelming response • RM23bn privatization of PLUS by UEM Group and EPF • National Fund Management – transfer of a mature cash-generating asset to new owners who can better harness its strengths

  8. … with many now on course towards regional championship A number of Malaysian companies are poised for regional championship: …in line with our roles in the NEM: Source: BCG: “New Global Challengers” and “Companies Piloting a Soaring Region”; PCG

  9. Khazanah has successfully delivered on milestones in Iskandar Malaysia projects and other NEIs, with much more work in the pipeline Source: Iskandar Regional Development Authority (“IRDA”); Khazanah analysis

  10. Support of NationalTransformation Initiatives Human Capital At Khazanah, we create value for the wider stakeholder economy KnowledgeDevelopment CorporateResponsibility Ideas & Thought Leadership • Performance-Focus, Transformation and Execution • Khazanah as Macro-Manager, GLCs as Micro-Managers • Sovereign Development Fund, not just SWF • Sensible Finance, Real Finance, and Islamic Finance • Cities and Economic Density • Complementary Advantage and Collaboration • Regional Champions • Malaysia Inc. v3.0 – Rebalancing and Crowding-in • Talent and Culture • Institutionalize Board Composition of Khazanah-Linked Companies Source: Khazanah analysis

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