PETALING JAYA: Tan Sri Azman Mokhtar has defended Khazanah's investment in Zivane, an online lingerie company in India, saying that they should be able to recover their investments in the medium term.
Azman who recently retired as managing director of the sovereign wealth fund, said they had invested US$19mil (RM80mil) for a 22% stake in the company and last December decided to provide their 2017 accounts as a conservative measure.
He said the fundamentals of the investments should be looked at carefully – pointing out that India is a market of one billion people, half of whom are women and that incomes were rising there.
"Zivame remains a going concern and in fact has just had its best-ever quarter and we remain quietly confident that we will be able over the medium term to recover all or almost all of what we have provided for, insyaAllah.
"In any case, again, as with all our overall investment assessment we need to look at things in perspective in that the same risk-taking in India for the consumer sector in companies ranging from the sale of paints for houses to jewellery, under what we call Project Billion have generated more than RM1bil realised and unrealised gains to date," he said in a farewell letter following his resignation on July 26 from Khazanah.
He said that they had made more than RM6bil in gains from investing in online e-commerce company Alibaba, saying that these gains alone are funding a multitude of technology investments, including in Zivame.
As for as investment in UBS through investment company Olivant in 2008, which also caused losses of RM1.7bil, Azman said that such losses, while large, are not exceptional.
He said that at all times, proper provisioning and recognition of the losses were made in line with accounting and prudential standards with even at one point 97% provisioning made of the RM3.6bil total investments
He added that an internal review by independent board members with inputs from KPMG found that the case was clear of wrongdoing and, investment processes and board approvals were complied with.
He said that more than half of RM1.9bil of the value of the investments were recovered through diligent recovery work.
Azman said that overall, Khazanah achieved net gains of RM82bil over a nine-year period from 2008 to 2017.
He said in investment terms, their gains have outnumbered their losses by 5 to 1.
"It is in and from these losses that arise out of proper risk taking that the winners come from and the correct way to evaluate an investment portfolio is, of course, to evaluate the portfolio performance on a risk adjusted basis rather than merely individual investment cases," he said.
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