$70bn Malaysia pension to dip into private equity

Having already invested in Ripplewood and AIG Asian Infrastructure funds, the $70 billion Malaysia’s Employees Provident Fund is looking to expand its fledgling private equity portfolio.

Malaysia’s Employee Provident Fund (EPF) is looking to invest up to MYR 1 billion ($269 million) over the next two years in private equity, in addition to setting up its own private equity division, according to local press reports.  EFP is a national savings scheme that provides Malaysians with basic financial security post-retirement.
Of the $269 million allocated for private equity investments, $26 million has already been invested, according to national news agency Bernama citing EPF deputy chief executive Roslan Ghaffar. Speaking to Bernama, Ghaffar also noted that EPF funds have been channelled into private equities since last year.
According to FinanceAsia.com, EPF recently invested in two funds, a global fund managed by US buyout firm Ripplewood and AIG Asian Infrastructure Fund. Ghaffar was quoted as saying that EPF is in talks with a number of international private equity groups about potential investments, and in the process of recruiting to set up its own fully-fledged private equity division.
“Actually, we have a few plans before the year-end, but we have to do it very carefully because this is not a very liquid investments like you are buying a bond, so as we go along, we will do our own due diligence, then we decide,” Ghaffar was quoted as saying on Bernama.
The capital currently allocated to private equity is a fraction of EPF’s total fund size, which stood at MYR 260 billion ($ 70 billion) at the end of 2005. Over 80 percent of the money is invested in fixed income instruments, with the remainder allocated to equity and real estate.
In addition to private equity, EPF is also looking to ramp up its investment in international property to boost returns from its fast-growing asset pool.