Malaysian pension fund sells London HQ

88 Wood Street, London. Source: Wikimedia

Kumpulan Wang Persaraan (KWAP) is selling its London headquarters at 88 Wood Street, London, for about RM1.7 billion (US$402 million) and repatriating the funds. The federation’s second-largest pension fund has about RM120 billion in assets.

It bought the property in 2013 for £215 million.

CEO Wan Kamaruzaman Wan Ahmad announced that the fund would benefit from a higher sale price and the sharp rise of sterling against the ringgit over the past two years.

“We are selling the property because we stand to benefit from real estate and foreign-currency gains,” Wan Kamaruzaman said.

“It’s also in line with the government call to repatriate gains back to invest in the domestic market.”

FTSE benchmark Bursa Malaysia and the ringgit have been hurt this year by investor worries surrounding political instability and by concerns about the effect of higher US interest rates on the Malaysian economy.

In August Kuala Lumpur asked state organisations like KWAP to consider selling overseas assets and repatriate the proceeds.

Najib said last month that government-linked companies planned to repatriate assets of RM627 million during 2015.

KWAP expected to repatriate the funds by the end of the first quarter to invest in Malaysian markets, Wan Kamaruzaman said.

The London building’s buyer was not named.

Wan Kamaruzaman predicted a recovery in the Malaysian stock exchange this year, partly fuelled by the weak ringgit.

“Our market looks reasonably attractive in 2016 after two negative years,” he said. 

The Bursa Malaysia index has fallen by 4.3 per cent so far this year after dropping 5.7 per cent in 2014. For foreign investors, the losses have been magnified by the 19 per cent fall in the ringgit against the dollar this year, making it the worst-performing Asian currency this year.

Overseas investors have pulled 19.2 billion ringgit from Malaysian stocks in 2015, more than double the 6.9 billion ringgit of outflows for the whole of 2014.

KWAP collects an average of about 4 billion ringgit annually from its members in pension contributions, Wan Kamaruzaman said. It reported a gross investment income of 6.47 billion ringgit in 2014, with the largest contribution coming from equities at 39 per cent of the total. Loans and private debt represented 23 per cent of income. KWAP’s international investments account for 15 per cent of its total assets, and it had a mandate to invest up to 19 per cent of the total overseas, he said.

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