> On ValueCap Loan
In an interview with P. GUNASEGARAM, ANITA GABRIEL and ERROL OH, Nor Mohamed talks about EPF loan to ValueCap. Excerpts:
Will you mandate a lending figure?
No, we won’t. We have to convince the banks, through our own efforts, that it’s safe to lend. Of course, they should only lend for viable projects. But there will be so many viable projects in Malaysia because we don’t have a financial crisis. That is key. In the West, they have a financial crisis. There is a credit crunch and so they cannot lend.
What about Valuecap? A lot of the information about it needs to be extracted with some effort. When it was set up, you mentioned that there would be transparency and openness with the accounts. Is that going to happen at all?
Basically, the accounts are open. In fact, when I started it in 2003, there were two views. Some agreed and others said it was not a good idea. But over time, it has proven to be a useful vehicle. We had thought RM10bil would be the right figure, but finally we decided on RM5bil first, and that seemed to be enough. It invested in blue chips, not only GLCs, and made good money. It built up a team of professional managers, and of course, the ownership is institutional: PNB (Permodalan Nasional Bhd), KWAP (the pensions fund) and Khazanah Nasional Bhd. Now that we have the stock market going down, there’s so much value for someone with deep pockets and a long-term view. This vehicle already exists, with good institutional shareholders and good professional management. So we thought, why not just add some money for them to pick up good stocks for the long term. Because EPF has so much liquidity but we don’t want EPF to be affected in any way, we said it doesn’t have to invest. It just gives a loan that it gives to other investors, and in this particular loan, the Government will give a guarantee so that EPF doesn’t have any risk at all. It’ll be paid a bit more that what it gets from the MGS (Malaysian Government securities) issues, and it’s the same risk.
This arrangement is very good because it will help stabilise the stock market. And EPF benefits in two ways. It gets the returns (from the loan). And No. 2, when the stock market stabilises and is not unduly below fair value, EPF, as a major investor, will also benefit.
So this time around, EPF is definitely providing a loan and it’s not coming in at equity level?
No. (It’s a) pure loan.
EPF has given a previous loan for the establishment of Valuecap. Has that been paid?
The loan will basically mature in February 2009. It was to the shareholders (of Valuecap) and I’m told the shareholders have worked out an agreement for the loan to be rolled over.
Rolled over for how long?
Actually, we don’t ask them because its not for us to determine.
Which is why, maybe all the more reason to disclose the investments, especially since its doing quite well.
We can talk to them. I think we can do it. No problem.
As is stands now, is Valuecap in negative or positive territory?
Oh, it’s positive, very positive.
According to the latest accounts, which is for end-2007, the fund size was RM7.6bil.
Yes, RM7.6bil, compared with RM5bil (the initial investment). The market moves up and down, but even if the market moves down, it still should be around that figure. Certainly more than RM5bil - BizWeek, The Star.
Bizweek please clarify the latest accounts of ValueCap with a Chartered Accountant as to the debt status of the company. If local banks will not lend in the present market conditions, then why should the savings of employees be utilised in such a risky venture. They are after all the retirement savings of the public and the Minister has no right to coax the EPF Panel to loan that amount just because the liquidity is there. Why not take from commercial banks and guarantee them? They should be happy. This is serious matter and has to be dealt in Parliament by the Opposition.I am surprised why they have not pursued on this matter. They have so many other matters at hand that they just do not have the time for this - My Journal.
