Axiata Group Berhad and Malaysia Venture Capital Management Berhad (Mavcap) have signed an agreement to establish a MYR 100 million ($30 million) venture capital fund named Axiata Digital Innovation Fund (ADIF).
In the first phase, Axiata will commit MYR 50 million ($15 million) to the fund while Malaysia’s largest venture capital firm Mavcap has pledged MYR 20 million ($ 6 million). The remaining amount will be raised from other principal investors, Axiata said in a press statement.
The fund will be the largest digital corporate venture capital fund in Malaysia, aimed at encouraging innovation and growth of the country’s digital ecosystem, especially among the bumiputeras (Malay and other indigenous people in Malaysia).
According to Axiata the fund will aid companies (in the digital services space) with innovative products and the right market fit. This effort is in line with the Malaysian government’s call to grow local technology companies, in particular among bumiputeras. By 2020, Axiata hopes to nurture and fund a substantial number of bumiputera and Malaysian digital services businesses and build 5 to 10 regional champions.
It is one of the first collaboration between a government-backed venture capital firm and a corporate investor. Mavcap, its partners Teak Capital and Questmark Capital are the fund managers of this new fund.
The companies (selected for funding) will be able to leverage on regional telco giant, Axiata’s extensive market reach as well as its in-depth knowledge of the region; helping them access to external funding and regional partnerships. Axiata has over 13 million customers in Malaysia and over 250 million across Asia.
Malaysian prime minister Mohd Najib Abdul Razak and the minister of communications and multimedia Ahmad Shabery Cheek were at the signing.
Axiata group president and chief executive officer Jamaludin Ibrahim said the venture was crucial to the telecom industry and for national development. “Axiata has been growing significantly over the last few years and (we) now feel a responsibility to spur other Malaysian companies, especially bumiputeras, to become successful too.”he added..
According to him the programme was in line with Axiata’s purpose of “Advancing Asia” via connectivity, technology and talent.
Mavcap chief executive officer Jamaludin Bujang said the fund was in line with the companies aspiration to increase availability of funding for deserving companies and fulfilled Mavcap’s role as an enabler in Malaysia’s venture capital funding ecosystem. “We hope that with this initiative, more Malaysian corporations will realise the value in actively investing and participating in venture capital funds. This is all the more crucial for Malaysian multinational companies (MNCs), as they must take steps to remain competitive in an increasingly globalised economic environment, particularly in the face of more fierce competition expected from foreign-owned MNCs.”