Investments Division
The Investments Division (Business Development) is part of the Commercial Services Department. The division is primarily responsible for providing business development advice, undertaking and managing the investments of the landowner companies under the management of MRDC. The division's key role is to prudently manage commercial investments of these landowner companies by providing sound commercial advice to the respective boards to undertake strategic investments that will enable sustainable flow of dividend income to the shareholders after the life of the mining or petroleum project.
The division was established after the organisational restructure that was undertaken in 2006. Subsidary companies now have investments based on proper policies and strategies that are geared towards achieving both growth in their portfolios and generating steady flow of income over the long term.
Investment Policy Guidelines & Objectives
The vision of the new Management team was also to have proper policy guidelines to guide investments for all companies and spread into all portfolio classes. It was also for prudent management and proper reporting purposes.
MSRM was the first company established by the State to manage royalty payments received from Ok Tedi Mining Ltd. MRSM Board approved its investment guidelines in September 2005. The investment policy guidelines for MRDC and MROT N0 2 were approved in August 2006 whilst the policy guidelines for the petroleum companies comprising PRK, PRG and PRM were approved in September 2007.
The objective of the policy guidelines was basically to maximize the returns on the investments within manageable risk levels associated with each asset class and over time, generate capital growth for the investments. Consistent with this objective, the philosophy is also to undertake capital stable investments that can yield acceptable returns and have the ability sustain adverse economic conditions. To achieve these results, MRDC and subsidiary companies pursue a diversified investment portfolio approach rather than speculative investments which the respective policy guidelines also do not allow.
Investment Portfolio Value
The performance of the investment portfolio for MRDC Group over the last five(5) years, 2005 – 2009 is as recorded in the table below. Since the approval of the policy guidelines and roll out of investment funds in later part of 2006, the total portfolio value for the MRDC Group has appreciated each year. It has increased from K443.18 million in 2006 to K870.40 million as at 31 December 2009.
The portfolio values for individual companies have also experienced steady growth each year. In 2008, the total portfolio values for MRDC Group have either declined or not appreciated at expected levels mainly due to the negative effects of the financial crisis that affected the share prices for stocks listed on the POMSoX and ASX. The effects of the global financial crisis continued into 2009 resulting in MRDC Group total portfolio value appreciating by only 2.16% or K18.82 million to K870.40 million compared to 2008 total value of K581.58 million.
| MRDC GROUP TOTAL INVESTMENT PORTFOLIO VALUES FOR PERIOD 2005 - 2009 | YEARS | MRDC | MRSM | MROT N0. 2 | MRE | PRK | PRG | PRM | TOTALS |
| 2005 | 29.74 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 29.74 |
| 2006 | 55.81 | 80.41 | 89.31 | 1.30 | 200.08 | 8.21 | 8.06 | 443.18 |
| 2007 | 58.05 | 99.46 | 138.88 | 0.06 | 350.08 | 19.28 | 13.14 | 678.95 |
| 2008 | 49.53 | 119.19 | 150.49 | 0.30 | 476.15 | 38.43 | 17.49 | 851.58 |
| 2009 | 61.89 | 141.64 | 184.50 | 0.29 | 419.70 | 40.79 | 21.59 | 870.40 |
It is worth noting that Mineral Resources Lihir Ltd (MRL) officially exited from the MRDC Group in May 2008.
Major Milestones
Some major investments recorded and worth noting include following;
- MROT in June 2007 acquired the Prestige Apartments comprising four(4) executive units on Touaguba Hill;
- MROT in July 2008 acquired the Danaya Haus(formerly WMI Building) at Gordons that comprise 4 levels of office complex;
- In July 2008 MRSM acquired 50% “A” Class controlling shares in Tabubil Engineering Ltd from Bishop Brothers Engineering Ltd;
- In November 2008, MRDC and petroleum companies(PRK, PRG & PRM) under a JV arrangement purchased 3 x 2 levels of commercial buildings in CBD of Cairns known as Coleman properties.
- PRG and PRM made a commercial decision in 2008 and 2009 respectively to take up shareholding in a 5 Star Port Moresby Hotel & Casino Project;
- In June 2008 MRDC, MRSM and MROT acquired a total of 24,500,000 ordinary shares in Airlines PNG Ltd at K1.00 per share;
- In June 2008 MRDC, MRSM and MROT also acquired a total of 2,000,000 ordinary shares at K1.00 per share;
- MROT in February 2009 purchased a prime commercial property known as the Matakau Land at Hohola that comprises a total land area of 7.649 hectares;
- In September 2009 MROT, PRK and PRG participated in BSP Subordinated Notes at 11% interest;
- In late 2009 MRDC Group comprising MROT, PRK, PRG and PRM acquired a 60% shareholding in Port Moresby Specialist Private Medical Centre(POMSPMC);
- In December 2009 a MRDC consortium comprising MRSM, PRK, PRG and PRM acquired 50% shareholding in Hevilift(PNG) Ltd;
