Launch of RM3b structured fund

The RM3 billion PNB Structured Investment Fund, launched yesterday to invest in structured products and a property trust that owns Permodalan Nasional Bhd (PNB) buildings, may generate returns of more than six to seven per cent a year, its manager said.

"Our funds in the past have been giving six to seven per cent annual returns. We are confident we can do better (with this new fund)," PNB president and group chief executive Tan Sri Hamad Kama Piah Che Othman told Business Times after the launch in Kuala Lumpur.

The closed-end fund plans to distribute income annually, subject to the discretion of the manager, the company said in a statement.

The principal investment is protected when held to the five-year maturity.

Speaking at the launch, Hamad Kama Piah said the new product was conceptualised after considering the current needs of discerning investors.

Principal preservation, capital appreciation and yearly dividends remain their priority during this time of market volatility, he said.

Up to 80 per cent of the fund will be invested in structured products issued by Deutsche Bank Malaysia, which may include bonds, stocks, equity-linked and hybrid products.

The fund will also put up to half of its money in PNB REIT (real estate investment trust), which owns seven properties in Kuala Lumpur and Johor Baru worth about RM1 billion in total.

The commercial buildings - Menara PNB, PNB Darby Park, PNB Damansara, Menara Tun Ismail, Wisma KPMG, Menara and Plaza Pelangi, and Pelangi Leisure Mall - are owned by PNB and 93 per cent occupied on average.

"PNB is 'giving away' its prime properties, at a cost of course, to be incorporated into the REIT as an added security to investors," Hamad Kama Piah said.

The REIT is currently private, but there are plans to float it on Bursa Malaysia's main board towards the end of the five-year tenure of the PNB Structured Investment Fund.

The structured investment fund is open to individual and institutional investors at a net asset value of RM1 during the offer period, which will last for 45 days until June 25, or upon full subscription of the units.

Minimum investment starts at 10,000 units for individuals and 50,000 units for institutions.

Minimum additional investment for individuals is 1,000 units and for institutions 5,000 units during the offer period. There is no limit to the amount an investor can put in.

By New Straits Times (by Chong Pooi Koon and Adeline Paul Raj)