KUALA LUMPUR: The country’s top institutional investors shared views on their approach to managing crisis plagued investee companies, citing its mandate and its holdings in the company, in the manner in which they choose to approach the issue.
Asked on the recent issue of Felda Global Ventures Holdings Bhd (FGV) and whether an institutional investor’s decision to stay in FGV could have prevented the crisis, Kumpulan Wang Persaraan (KWAP) CEO Datuk Wan Kamaruzaman Wan Ahmad said every investor will look at the situation differently.
“We’re advised to look at it objectively. Ultimately the decision to increase (stake) or stay (in the company) depends on a collective decision. We prefer to stay because ultimately we still think there’s light at the end of the tunnel. It is a GLC. There’s a lot of support from the government because this is something that will affect shareholders and stakeholders,” he said at a plenary session titled : Plans to Raise Returns for Shareholders at the Invest Malaysia 2017” here yesterday.
Other panelists included Employees Provident Fund (EPF) CEO Datuk Shahril Ridza Ridzuan, Permodalan Nasional Bhd president and group CEO Datuk Abdul Rahman Ahmad and Khazanah Nasional Bhd Executive Director Investments and Head of Strategy Ahmad Zulqarnain.
“KWAP always remain as a portfolio investor and we don’t take any controlling interest in any investee companies. We cap ourselves at 20% max. We don’t get involved in the day-to-day running of the company, we don’t even have board directorship,” said Wan Kamaruzaman, adding that in terms of investments, most of time institutional investors stay invested in investee companies due to liquidity and circumstances.
Employees Provident Fund (EPF) CEO Datuk Shahril Ridza Ridzuan said EPF is a long-term investor, but ultimately it is a portfolio investor. He said the reality is that there is a limit in what an institutional shareholder can do if it does not have direct control over the management of a firm.
“Given the size of EPF and our stakes in so many companies, it’s difficult to try and spend so many management bandwidth changing companies when they refuse to change,” Shahril said.
Citing the example of the former Malaysia Airlines, he said it was difficult to turn around the national carrier and at some point, EPF decided to cut its losses and put the money to better use elsewhere.
“We take some losses on some investments but we can reap quite a capital to make some money back. That’s the hard decision you have to take on some mistakes. Sometimes it’s a liquidity issue and you can’t get out (of the company) quickly enough, especially in Malaysia where the (institutional) funds tend to hold fairly concentrated stakes in companies and sometimes it’s impossible to get out fast enough,” said Shahril.
Permodalan Nasional Bhd president and group CEO Datuk Abdul Rahman Ahmad said the reason an institutional investor does not persevere in such circumstances is linked to whether it can effect change.
“Malaysia is unique because there are not many companies that are institutionalised. For most companies, there is an onus somewhere. For institutional investors, we’ve to make a choice or judgement whether we can influence the controlling shareholders or management. If we don’t think we’re able to do so, I think it’s only fair for us to exit (the company). Where we do have control, you’ve seen that we persevere to actually try to create value in them,” he said.
Source: The Sun Daily