Khazanah Nasional Bhd’s divestment of its 40 percent stake in Malaysian Shoaiba Consortium Sdn Bhd will allow it to exit with a healthy profit at a value based on future cash flows of the project.
Khazanah said it entered into the joint investment in 2005 with Malakoff Corp Bhd and Tenaga Nasional Berhad to support Malaysia’s entry into Saudi Arabia’s independent water and power producer market.
“As the project is completed and fully operational, Khazanah has achieved the commercial objectives of its investment in the consortium,” it said in a statement today.
Khazanah said it assessed all opportunities for divestment against set financial and strategic targets.
“Assets may be considered for divestment once the intended investment objectives and targeted returns have been achieved, as is the case with the divestment of our stake in the consortium."
The wealth fund said divestments may also depend on the strength of the market, as well as the availability, quality and credibility of buyers.
Khazanah said under its refreshed mandate, it operates on a two-fund model – a commercial fund and a strategic fund.
“In general, our commercial fund is focused on creating a global portfolio that diversifies our assets and income for the country’s benefit. Our strategic fund focuses on strategic domestic investments, particularly in infrastructure,” it said.
It said the proceeds from the divestment in the consortium are reinvested based on the objectives of the two funds or are used to repay existing debts on its balance sheet.
“For the year to date, Khazanah has committed investments amounting to approximately RM1.4 billion and reduced overall debt by approximately RM6.4 billion, in line with our corporate strategies.
“We further expect to undertake more investments in the second half of 2019, based on the opportunities that we are exploring,” it added.
The consortium has a 50 percent equity interest in Saudi-Malaysia Water and Electricity Co Ltd (Samawec), which in turns owns a 60 pe cent stake in Shuaibah Water and Electricity Co Ltd (SWEC), and 60 percent in Shuaibah Expansion Holding Company (Sehco), which owns a 97.5 percent stake in Shuaibah Expansion Project Company (Sepco).
SWEC owns the Shuaibah 3 Independent Water and Power Plant, the first and largest of its kind in Saudi Arabia, while the Shuaibah 3 Expansion was commissioned in 2009.