Malaysia’s Employees Provident Fund (EPF) is to invest around MYR1.1bn (€244m) in a 40% stake in a group operating a key toll road serving Kuala Lumpur.
Mohamad Nasir Bin Ab Latif, the fund’s deputy chief executive for investment, told IPE Real Estate that a heads of agreement had been signed.
EPF is going through due diligence.
The fund owns a number of other toll roads in Malaysia, including the Cheras-Kajang Highway and PLUS Expressways, which itself owns several toll roads, Nasir said.
In the latest deal, with the listed Ekovest, a construction-based entity, EPF has paid cash to buy into Konsortium Lebuhraya Utara-Timur (KL) Sdn Bhd (Kesturi).
Kesturi is the concession holder of the Duta-Ulu Klang Expressway (DUKE).
DUKE 2 is under construction and due for completion by the end of this year.
While local media has suggested the purchase price might overvalue the current DUKE, sources told IPE Real Estate the purchase agreement included DUKE 2 and the next phase of the toll road extension, DUKE 3.
Ekovest bought a 70% stake in a 34-year concession for the 18km Duke in 2012, acquiring the remaining 30% the following year.
EPF’s single-largest investment in toll roads is a MYR23bn deal to acquire PLUS Expressways jointly with UEM, a wholly owned subsidiary of state investment arm Khazanah Nasional.
UEM is the largest infrastructure operator in Malaysia.
The partners are looking beyond Malaysia for investment opportunities.
EPF and UEM were among bidders for Queensland Motorways, sold in 2013 to a group led by QIC for AUD7.1bn (€4.9bn).
EPF took a 49% interest in a Malaysian infrastructure company, Taliworks, which also owns toll roads, in April.
The fund paid Taliworks MYR66.5m for a 50% stake in toll concession company Pinggiran Muhibbah, which operates and maintains the New North Klang Straits Bypass Expressway.
EPF and Taliworks also recently acquired a 35% stake in the solid waste management company, SWM Environment Holdings Sdn Bhd.
With a cashed-up capital partner in EPF, Taliworks has flagged plans to look for growth opportunities in areas where it has expertise, in Malaysia and in other developed countries.
Nasir said EPF was “particularly keen” to go into waste management, toll operations and renewable energy in Malaysia and other developed markets.
It is looking for opportunities in Singapore, Japan, South Korea, selected European countries and the US.
Nasir told IPE EPF was ramping up its investment in infrastructure and had been building its internal capacity to source and evaluate deals.
It now has a 50-man team assessing opportunities.
Overseas, EPF is working with co-investors and has invested in other funds.
It has just won board approval to allocate $200m (€178m) to finance ports, toll roads and airports.
Two offshore managers have been mandated to look for opportunities to place infrastructure debt.
“We have entered into a deal to finance the development of a power station through co-investment in the US,” Nasir said.
Other recent infrastructure deals include a water project and oil tanking facilities, he added.
The latter is being done through Australia’s Macquarie Group.
Two years after EPF bought its first infrastructure asset, it now has a portfolio valued at around MYR5bn.
