However, Permodalan Nasional Bhd now wants income from dividend payouts to be around 60-70 per cent
Permodalan Nasional Bhd is ready to help its companies expand although the state-owned fund manager wants more of its income to come from dividend payouts, its chief said.
This could be in the form of additional investments in its companies that are among Malaysia's biggest.
PNB, through its unit trust funds, controls companies like top lender Malayan Banking Bhd, plantation giant Sime Darby Bhd and UMW Holdings Bhd, an auto and oil and gas group.
There are concerns that PNB may be limiting the growth of its companies by squeezing more dividends from them when the stock market is not doing well.
PNB uses the dividends and money made from share trading to distribute income to its 9.5 million investors who have stakes in its unit trust funds.
"When they need money, that is also an opportunity for PNB to increase its investments," chief executive Tan Sri Hamad Kama Piah Che Othman told Business Times in an interview recently.
Malaysia's stock market fell 40 per cent in 2008 as investors braced themselves for a global recession. However, PNB, which manages more than RM120 billion in assets, have been able to pay good rates to investors.
Apart from buying and selling stocks, PNB has also relied a lot on dividend payouts from its listed companies to improve its income. This will continue, Hamad said, and PNB would want to see even more of its income coming from dividends.
"We want a lot from dividends. If it was 40 per cent (of total income) then, now we want it to be around 60-70 per cent. Automatically we will become more stable," he said.
Although critics say this could hurt the chances of PNB companies expanding in a downturn with less cash, Hamad argues that there are two ways to deal with this.
One is for the company to plan ahead as it would know how much to budget for expansion and for dividends. Second is to tap PNB for funds that it needs.
However, the investment "has to give good returns".
