ValueCap to pick firms from six key sectors

VALUECAP Sdn Bhd, which was recently reactivated with RM20 billion to invest in undervalued stocks, will look at listed companies in six key sectors, said Minister in the Prime Minister’s Department Datuk Seri Abdul Wahid Omar. He said the sectors are banking, consumer industries, services, construction, plantation and property. “Selection will not be based on sentiment or speculation but on companies with strong and consistent earnings record, stable cash flow and spearheaded by good management,” he said in a written reply in Parliament, here, yesterday. “Companies with good returns in terms of dividend and which are ‘defensive’ in nature will also be good choices, for example Malayan Banking Bhd, United Plantation Bhd and real estate investment trusts, which generally give annual dividends of more than five per cent.” Wahid was asked where the RM20 billion would be sourced from, and whether there were studies to show that the funds could help the stock market. He said ValueCap’s RM20 billion fund will be provided by its three shareholders — Khazanah Nasional Bhd, Retirement Fund Inc and Permodalan Nasional Bhd. “The injection will be in the form of bonds and external financing or other capital, with board approval. The funds will not be obtained by the government and are not guaranteed in any way by the government.” Wahid said ValueCap’s activities will be undertaken by professional fund managers with strong track record to ensure that its long-term objectives and mandate are met. ValueCap is expected to start investing next month when its shareholders release the first tranche of the fund. From 2003 to 2013, the company generated an annual average return of more than 16.3 per cent. It accumulated RM8.5 billion in profits as at the end of last year, of which the majority was redistributed in the form of dividends to its shareholders amounting to about RM8.4 billion.

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