Zeti hints on diversification, installing risk management and revamping the organisation
PERMODALAN Nasional Bhd (PNB), the country’s largest fund-management company, is set for another round of transformation.
Its newly appointed chairman Tan Sri Zeti Akhtar Aziz, who is the former governor of Bank Negara, has hinted on her plans, which entail a diversification strategy, installing risk management and revamping the organisation.
These changes are important for PNB, which has been accused of not being a role model of transparency in the past. But that image quickly changed after former chairman Tan Sri Wahid Omar stepped into the office in August 2016, replacing Tun Ahmad Sarji Abdul Hamid, who had held that position for almost 20 years.
He later was joined by Datuk Abdul Rahman Ahmad, who was appointed as PNB president and chief executive officer to succeed Tan Sri Hamad Kama Piah Che Othman.
Since then, it has been a paradigm shift within the corridors of PNB, including how press conferences are conducted.
Under Ahmad Sarji and Hamad Kama Piah, press conferences were usually done in a brief manner with limited question-and-answer opportunities, in a very regimented way at Menara PNB.
Things changed after Wahid and Rahman were appointed. Never before had PNB shared its investment strategies but this was now the norm.
Breaking away from tradition, members of the media were told to occupy the main seats instead of the top officials. It was in a way PNB ascending into the normal realm of transparency and disclosure when Wahid and Rahman first briefed the media in November 2016 on the firm’s five-year strategy.
The entire session lasted as long as a football match.
Wahid relinquished his position as chairman this year after the change in government following the May 9 general election and was replaced by Zeti, who took over the chairmanship of PNB in July this year.
In less than 100 days in office, Zeti, who had been the governor of the central bank for more than 16 years, had her first event as the chairman of PNB.
This time, PNB moved things up a notch as the event was done in a very stylish manner. There were big screens adorning the walls of the ballroom in one of KL’s swankiest hotels.
There was no apprehension shown by Zeti, who took the stage and quickly got down to business. Dealing with large crowds, presenting financial facts with ease and handling press queries are all second nature to a seasoned central banker who has had to deal with far more pressing scenarios and crowds in her years as the governor of the central bank.
Clad in her usual dark blue baju kurung, she announced PNB’s year-to-date performance, which is unusual for the RM288.1bil fund.
As she explained about PNB’s new products and slides started to roll in the background, Zeti pointed out that despite the volatility in the market, PNB has done very well and showed that PNB has distributed RM176.4bil to its account holders since its inception in 1981.
She later alluded to the need for transformation in PNB both in its asset allocation strategy and organisation at a press conference.
“We need to increase our capability in risk management... and we also need to build buffers because there would be a time when there would be setbacks because the environment is beyond our control,” she told reporters after the launch of PNB’s new unit trust funds on Thursday.
She also pointed out that organisational transformation was important to achieve a higher level of performance.
“During my term as the governor of Bank Negara, we had three organisational transformations. We were very ambitious to be at the frontier of central banking.
“So, I would like to be equally ambitious here,” Zeti said, referring to her plans for PNB.
Prior to her role as chairman, PNB, in less than two years, had undertaken an aggressive exercise on its listed companies where it had controlling stakes.
These exercises include the demerger of conglomerate Sime Darby Bhd into three separate listed companies, UMW Holdings Bhd from UMW Oil & Gas Corp Bhd (now known as Velesto Energy Bhd) and the decoupling of Chemical Company of Malaysia Bhd (CCM) and CCM Duopharma Biotech Bhd, delivered in terms of returns to shareholders.
PNB also oversaw the acquisition of I&P Bhd by SP Setia Bhd. With Zeti on board, the fund is moving into phase two of its transformation. She said the fund would focus on consolidating its previous exercise.
However, for this year, Zeti reckons that the fund would need to take a step back and let such corporate exercises be driven by market forces.
She also pointed out that diversification of PNB’s investment portfolio would be one of her areas of focus, as well as enhancing risk management and providing a buffer against any shocks from economic cycles and financial markets.
One of the areas of focus is to rejuvenate its property segment.
“There is going to be a period of consolidation. Of course, we don’t exclude any market-driven merger or demerger exercise, but not precipitated by PNB.
“We will let it be driven by the market process,” she said.
More than 70% of PNB’s current assets are currently deployed in the local stock market, and it controls some of the largest companies on Bursa Malaysia.
The companies under its stable account for 10% of Bursa Malaysia’s market capitalisation that is close to RM1.12 trillion.
Zeti also pointed out that PNB would need to review its five-year transformation programme known as Strive 15, which was introduced 2½ years ago.
The programme targets, among others, for PNB’s asset under management to increase to RM350bil by 2022.
“The Strive 15 (initiative) is at mid-year now. Given the changes in the domestic and international environment, it is very appropriate to conduct a review at this point in time and see what changes we need to make,” Zeti said.
Meanwhile, Abdul Rahman said PNB would be focusing on its “core companies”, that is companies where PNB has more than a 10% stake in or exposure of above RM1bil.
“Our focus earlier last year was on our strategic companies, so now, we are moving towards our core companies,” he said.
As a start, PNB has announced its participation in Sapura Energy Bhd’s transformation exercise, which involves a RM4bil cash call. Zeti has said that the deal to participate was, however, done on certain conditions, which she did not elaborate on.
Sapura Energy had in late August announced a RM4bil cash call to shore up its financial position and capital structure. PNB is the second-largest shareholder in Sapura Energy, owning about 12%.
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