KUALA LUMPUR: Permodalan Nasional Bhd (PNB) will tactically increase its investments global to 30% by 2022, from its current global exposure of 8.5% as of end-2019 following the conclusion of its Mid-Term Review.
It said on Monday it would continue to accelerate portfolio diversification via investments into new asset classes and geographies, including global real estate opportunities with attractive yields.
This was one of the key strategies under the plan, known as “Focus 4”, which would streamline the STRIVE-15 initiatives following its Mid-Term Review.
Under its diversification strategy, it would accelerate portfolio diversification via investments into new asset classes and geographies, including global real estate opportunities with attractive yields.
As for value creation, it would set up a proposed stewardship framework for strategic companies;
PNB also said its risk management would inculcate a robust risk culture by enhancing key elements of enterprise risk management.
Under its organisational transformation, it would focus on improvements in people & culture, governance & processes, digital and structure & KPI.
At its first ever virtual media briefing, PNB also announced its performance for the financial year ended Dec 31,2019 (FY2019) and shared its outlook for the year ahead.
PNB Group chairman Tan Sri Dr Zeti Aziz said: “The extensive Mid-Term Review enabled PNB to gather critical insights and analyses of our current dynamics, strengthening our strategic direction as PNB advances forward.
“This has formed the crux of the Focus 4, which articulates four priority areas for PNB to facilitate sustainable growth and unlock value, namely Diversification, Value Creation, Risk Management and Organisational Transformation.”
PNB president and group chief executive, Jalil Rasheed explained Focus 4 reflects a strategic transition from STRIVE-15, whereby PNB was able to strengthen broad fundamentals and put in place the necessary frameworks, to Focus 4 which hones in on specific high-impact areas that are more attuned to the market environment.
“Adopting a shorter-term three-year approach also provides PNB with the flexibility to be more responsive and adaptable to harness opportunities against the fast-paced backdrop of current times,” Jalil said.
PNB will continue to accelerate portfolio diversification via investments into new asset classes and geographies, including global real estate opportunities with attractive yields. A key target is to tactically increase global exposure to 30% by 2022, from PNB’s current global exposure of 8.5% as of end-2019.
In tandem, to optimise returns amidst the persistent low-yield environment, PNB is continuously reviewing its portfolio with a view to invest in counters with better prospective yields and long-term returns potential, to drive a more efficient use of capital. In the near-term, this includes tapping into prospects offered by current market mispricing.
This strategy would also enable PNB to strengthen its cash position in anticipation of market volatility. This will be underpinned by strengthening its existing investment processes and enhancing efficiency of decision-making, with an emphasis on responsiveness to opportunities and risks, taking into consideration the longer term nature of its investment horizon.
In order to bolster the performance of its investee companies and create further value, PNB has established the Stewardship Framework which aims to articulate PNB’s philosophy and expectations of the companies within its investment stable, with a view to promoting a performance-driven culture and improving the respective companies’ organisational health.
Apart from positioning PNB as a value-adding investor, the framework also sets out the PNB Voting Guidelines which have been developed to institutionalise best governance practices in Malaysia and set clear expectations of investee companies.
In line with its five-year Enterprise Risk Management (ERM) Blueprint, PNB aims to inculcate a robust risk culture and infrastructure by focusing on four key ERM elements namely governance, framework and processes, digitalisation and resources.
This includes expanding its scope to manage transversal risks which cut across the entire organisation, in view of the growing complexity of today’s environment and to further enhance operational efficiency.
As part of its long-term aspirations for organisational transformation, PNB put in place 10 elements for greater institutional effectiveness and excellence, which are grouped into four key interconnected areas for the immediate term: People & Culture, Governance & Process, Digital, and Structure & KPI.
People & Culture emphasises talent acquisition, development and retention via a highly conducive working environment and talent management framework to promote well-being and career growth, whilst inculcating a more open culture with enhanced communications and outreach initiatives.
Governance & Process focuses on robust corporate governance and creating a Knowledge Management Framework to build an efficient knowledge-based organisation.
Through PNB’s five-year IT Blueprint, digital technology is utilised as a key enabler to strengthen efficiencies, supporting the establishment of an optimal structure and KPIs aligned with the objectives of the organisation to drive performance.
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