KUALA LUMPUR: Khazanah Nasional Bhd has managed to reduce its debt from RM55 billion to RM47 billion in one year through asset and investment sales, its managing director, Shahril Ridza Redzuan said.
He said the country’s sovereign wealth fund also managed to generate RM9 billion in revenue during the same period and is expected to recover and generate RM5 billion in potential revenue this year.
“Although the value of our assets is still at RM130 billion, our debt has dropped by RM10 billion. So, in terms of our net assets or our net balance sheet, it has been stronger,” he said in an interview on RTM tonight.
Shahril also said the sale of assets would allow them to restructure existing ones to be more sustainable and low risk.
“From our projection, Khazanah can and should have a debt of around RM35 billion because by using a combination of debt and equity from our government, we can maximise our income.
“As with other companies, if they want to buy assets, they will not buy the assets with equity alone. They will buy the equity together with the debt,” he said, adding that the sale of assets is a business strategy, and the people need not have to worry about it.
“If we were to look in terms of the public viewpoint, they may be mistaken. They may think we are merely selling. But, on the other hand, when we sell the assets, we generate money or new funds from the sales.
These funds will be reinvested in new assets to generate profits for Khazanah and the government, he said.
Shahril said Khazanah also used the funds to reduce debts.
For 2018, Khazanah recorded a pre-tax loss of RM6.271 billion compared with a pre-tax profit of RM2.896 billion the previous year.
The profits were affected by slightly higher disposals compared with that of previous years, lower dividend income and higher depreciation provision as it went through the transition process, which also coincided with market volatility.
Khazanah declared a dividend of RM1.5 billion for 2018.
The Pakatan Harapan government last year initiated a restructuring exercise in Khazanah which saw a change of leadership in its board and management, as well as the introduction of new mandates and objectives.