KUALA LUMPUR – The Armed Forces Fund Board (LTAT) said its decision to allow the extended February 2 deadline for the proposed privatisation of Boustead Holdings Bhd (BHB) to lapse was made in the best interest of its key stakeholders, particularly the contributors.
The board said it was a “conscious decision”, considering the changing circumstances surrounding the privatisation plan, which resulted in heightened risks towards ensuring the successful completion of the exercise.
“These changing circumstances include potential uncertainties as a result of prolonged Covid-19 measures that could further delay the privatisation journey; further uncertainties to the key businesses of Boustead Group impacted by the pandemic, among them banking, hotels, property, and retail petroleum.”
LTAT also cited the ongoing uncertainty surrounding the littoral combat ship project; leadership changes both at LTAT and Boustead, which required sufficient time to review ongoing projects/initiatives; and clarity on Boustead Group’s rejuvenation plan, including addressing its debt levels.
“While the privatisation may not be timely at this juncture, the lapse in deadline will enable us to review and reassess our strategies as part of our intention to fully assess and further fine-tune LTAT’s five-year strategic transformation plan,” it said.
It said LTAT remained steadfast in continuing its transformation journey towards becoming a world-class pension fund.
“In line with our contributors’ retirement objectives, LTAT shall remain true to its nature as a long-term investor and a custodian of patient capital, hence we shall not hesitate to be judicious in carrying out our investment strategies,” it said.
It said LTAT’s current focus moving forward is on the execution of its strategic asset allocation framework, which was completed towards the tail end of 2020 and sets long-term targets to deploy capital towards better diversification of the statutory body’s portfolio of investments.
The board intends to rebalance its portfolio by increasing fixed income investments (20%), reducing real estate and private equity exposure (10% each), increasing diversification of its public equity portfolio (50%) and the remaining in other asset classes including money market instruments.
LTAT said that it also intends to commence its plan for international diversification at a later stage, similar to other peer institutions.
It will also continue to assess its options in respect of creating value from its existing key investments, including reviewing merits of any potential value creation exercise, subject to commercial viability to LTAT and BHB, within the boundaries of the takeover rules and relevant regulations.
“At this juncture, LTAT will continue to work closely with BHB in terms of providing support towards its ‘Rejuvenating Boustead’ plan and future growth strategies,” it added. – Bernama, February 5, 2021
