Putting EPF money to work in London
Published on: Sunday, July 21, 2019
By: David Thien
Tun Dr Mahathir’s recent working visit to London is yet another proof of our affection for the United Kingdom and Eire for education and trade. Mahathir was the premier who a “buy British last” campaign when he was Premier the first time in 1980s.
Sabah or Malaysian politicians were fond of London, spending time there while in office, notably with even the second prime minister Tun Abdul Razak passing away there while on treatment for cancer. Then Sabah Chief Minister, Tun Mustapha Harun, also spent considerable time in London in the late 1960s to early 1970s and owned prime properties there.
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While Malaysian leaders seek foreign investment funds into Malaysia, our Employees Provident Fund is used to invest in London, now with a Muslim Mayor seeking to build more affordable housing as is the case in Malaysia.
In the early 21st century, when the in excess of £140 billion worth Employees Provident Fund Board (EPF) was cleared to invest overseas by the prime minister, London was a preferred opportunity for EPF to place its fund savings there for better returns on investment.
The case in point is London’s Battersea project which EPF invested in what used to be Sir Giles Gilbert Scott’s iconic monumental power station building that first opened in 1933. The power station used to generate 20 per cent of London’s electricity supply at its peak, until it stopped producing power in 1983 (see separate story).
The Battersea Power Station which is banned from demolition as it is a Grade II listed building is currently undergoing through a comprehensive refurbishment/reconstruction that will complete in late 2020 or 2021.
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The five-year project is the largest historic building project ever undertaken in the United Kingdom and Europe. When finished, will become the heart of the wider 42-acre mixed use scheme.
Apple’s decision to base their UK headquarters in the former coal-fired power station’s central boiler house from 2021, has guaranteed a future income stream, if realised, for the Malaysian investors.
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Some big Malaysian developers were involved in the London Battersea Power Station project from the beginning like Sime Darby Property and S.P. Setia through which EPF already indirectly own a large stake in these developers, besides the £50 billion equity held Malaysian government-owned entity Permodalan Nasional Berhad (PNB).
PNB and EPF already own 70 per cent of the entire Battersea Power Station development through their holdings in these property developers and in the case of EPF through a direct 20 per cent holding.
Battersea Power Station Development Company Limited (BPSDC) said the current deal will not affect the shareholdings in Battersea Project Holding Company Limited, which remain unchanged between S P Setia (40 per cent), Sime Darby Property (40 per cent) and EPF (20 per cent).
“We are undertaking to transform this once dormant area into a vibrant place that is attracting people from all over the world,” says Simon Murphy, CEO of Battersea Power Station Development Company after taking over from Rob Tincknell.
Battersea Power Station is touted as one of central London’s largest, most visionary and eagerly anticipated new town centres in which roughly half the development will comprise shops, restaurants and office space. In addition, there will be a six-acre public park, a town square and a new tube station to be named Battersea Station (scheduled to be within Zone 1).
The Battersea Power Station project includes 3.5m sq. ft of mixed commercial space, together with 4,364 new homes, which are priced beyond the affordability of many Londoners and is dependent on rich foreigners to buy some of the unites.
The successful regeneration of Battersea Power Station is projected to create 20,000 new jobs, inject £20bn into the UK economy and create a funding mechanism for the first major tube line extension since the Millennium. A new NHS medical facility is also being built.
Circus West Village is the neighbourhood centre for the first part of the development. It opened to the public in Spring 2017 and according to the developers, since then over 700,000 people have visited to enjoy the ongoing programme of events and the new shops and restaurants.
Residents started to move in to Circus West early in 2017 and continue to do so. The Village Hall, a new performance space, has opened at Circus West Village and a new MBNA Thames Clippers River Bus service commenced on Nov 1, 2017.
The Battersea Academy of Skills Excellence (BASE), the development company’s bespoke jobs and training service created for those living locally, was launched in 2016. It is focused on matching people with jobs at Battersea as well as providing training relevant to the job pipeline at the development.
Datuk Wong Tuck Wai, Chairman of BPSDC, added: “This transaction is a further sign of Malaysia’s long-term commitment to Battersea Power Station. We are incredibly proud to be stewards of this iconic project.
“There is a real momentum on site and we look forward to working with all our partners to complete this significant redevelopment.”
Simon Murphy said: “This reflects confidence in the excellent progress being made at Battersea Power Station and is an important step in ensuring this London landmark is appropriately owned and managed for future generations.
“We are working closely with all our shareholders and stakeholders to deliver this huge regeneration project on time and within budget and in so doing both achieve their objectives and create a vibrant new neighbourhood for Central London.”
Now under a restructuring, PNB will hold a 65 per cent stake in the joint venture vehicle and EPF will hold the remaining 35 per cent stake.
Development is continuing at the mixed-use regeneration project considered the largest in Europe, which will include retail and leisure units, commercial space, and upmarket apartments with price tag from some £578,000 for a one bed-room studio in the next phase of development due for completion in 2021.
Kota Kinabalu, and London as the most visited city in the world in competition with Bangkok, share some common trends. The demand for affordable housing is not being realistically met.
First, the trend of young locals unable to afford to buy quality property and live in the city centre where prices of homes are chasing after rich foreigners, like in London.
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