By Nurunnasihah Ahmad Rashid
KUALA LUMPUR, Sept 28 (Bernama) — The sale and purchase agreement (SPA) signed by the Armed Forces Fund Board (LTAT) is set to align with its long-term reinvestment strategy, focusing on enhancing returns and ensuring sustainable financial growth, said economist Prof Dr Geoffrey Williams.
He said the agreement, which will release funds from legacy assets, is seen as a key component in LTAT's commitment to bolstering the capacity for future investments.
“A major focus of the reinvestment strategy is on the pharmaceutical and biopharmaceutical sectors, driven by the government's GEAR-up programme, which encourages strategic shifts within government-linked investment companies, including LTAT.
“This SPA provides the necessary funds for LTAT to redirect its focus towards higher-income investment opportunities, particularly in value-added sectors like pharmaceuticals. This aligns with LTAT’s goal of supporting armed services retirement in the long term," he told Bernama.
Williams said LTAT contributors are expected to benefit from this transaction through higher investment income, which will help expand the fund size and meet future retirement obligations more effectively.
“This is particularly crucial as retirees will need to adjust to rising living costs and wage indicators.
“At the same time, LTAT’s continued role as a major shareholder in Boustead Holdings Bhd is expected to reinforce the company’s market position,” he added.
According to the economist, LTAT is currently reviewing Boustead Holdings by shedding non-core assets and underperforming units, moves aimed at improving the group’s competitiveness.
Previously, LTAT said the review is expected to significantly strengthen Boustead Holdings' balance sheet and financial position, as the sale will improve its gearing ratio and will enable Boustead Holdings to meet its financial obligations.
Furthermore, Williams said the funds released from the sale, including those from Affin Bank, will allow LTAT to diversify its investments while retaining a significant 22.01 per cent stake in Affin Bank, demonstrating its ongoing commitment to the company.
"The diversification into high-yield areas, such as biopharmaceuticals, is part of LTAT’s strategy to generate better returns with minimal risks," he said.
From an economic standpoint, the Sarawak government’s acquisition of shares in Affin Bank will likely stimulate the region’s broader development plans.
Williams suggests that by becoming the largest shareholder, Sarawak could potentially leverage the bank as a development tool, complementing its newly established Sovereign Wealth Fund.
"This positions Sarawak to have its own state-centric bank, which could play a significant role in financing regional development initiatives," he explained.
Looking ahead, the SPA may open doors for future collaborations between LTAT and the Sarawak government, with the potential areas involving infrastructure projects that align with Sarawak’s long-term development plans, or the sale of non-core assets such as the University of Nottingham campus, which was previously withdrawn.
On Friday, the Sarawak state government, through its wholly-owned subsidiary, SG Assetfin Holdings Sdn Bhd, finalised the SPA of Affin Bank’s shares from the LTAT and Boustead Holdings. Consequently, the Sarawak government is now the largest shareholder in Affin Bank, raising its stake to 31.25 per cent from 4.81 per cent previously.
Speaking at the SPA signing ceremony, Deputy Defence Minister Adly Zahari said the agreement is expected to provide significant benefits to the retirement savings of LTAT members.
"Through this strategic investment collaboration, the retirement funds of Angkatan Tentera Malaysia (ATM) members will be managed more effectively and efficiently, ensuring better and more stable returns.
"This not only enhances financial stability after retirement but also provides assurance for a brighter future," he said.
Adly added, “On behalf of the Ministry of Defence, I give the assurance that despite this agreement, LTAT remains one of the major shareholders of Affin Bank. As a provident fund manager, LTAT must prioritise diversification of assets and manage it with the focus on fund stability and sustained returns.”
“Today’s signing ceremony marks a new era of strategic collaboration and I am optimistic about the mutually beneficial strategic opportunities,” he added.
--- BERNAMA
