Malaysia government-linked private equity fund Ekuiti Nasional Bhd (Ekuinas) is looking to intensify its deal sourcing efforts and tap thematic investment opportunities in fast-growing digital sectors.
“Following the pandemic, we see a growing potential in companies within the healthcare and digital solutions industries. We hope to seize any opportunities that may add value to our portfolio,” Ekuinas said.
Ekuinas’s original target sectors include oil and gas, education, retail & F&B, FMCG, healthcare and services. Over the years, it has also broadened its focus to include digital solutions and manufacturing.
“Our role is more important than ever to identify high potential companies that may have found themselves in distressed situations [post the pandemic]. The challenge we saw in 2020 will continue to be seen in 2021 as the crisis will persist,” Ekuinas noted.
At the same time, the PE firm is also targeting to realise its investments from its second fund this year.
“One of the focus [areas] for the year is the process of crystalising our second fund, Ekuinas Direct (Tranche II) Fund, which we target to close by end of this year,” according to Ekuinas.
In 2019, the Ekuinas Direct (Tranche II) Fund, which has been fully deployed, recorded a gross portfolio return of 582.9 million ringgit ($142.25 million) and an IRR of 13.5% per annum, exceeding its internal target of 12%.
DealStreetAsia has learnt that the state-linked PE firm may be weighing the sale of its interest in clean petroleum product tanker firm Orkim Sdn Bhd this year, as part of its move to realise investments in its second fund.
The Ekuinas Direct (Tranche II) Fund invested in Orkim back in August 2014. Orkim is the only asset that is currently part of the fund portfolio.
On the impact of the pandemic on its deal momentum, Ekuinas said its investments and divestments are mid-term plans, which have already been set in motion.
“To some extent, we are mindful that there may be delays due to the disruption, but it should not affect our overall strategy. We remain firm in holding on to our investment values and discipline regardless of the situation, to ensure we continue to be selective and invest into quality deals,” it added.
In 2019, Ekuinas had said it will earmark 10-15% for technology investments. Asked if Ekuinas will increase the allocations following the pandemic-induced acceleration in digitalisation, the firm said, “technology has been a key beneficiary and has done well in the past year. We continue to remain highly interested in further opportunities in this sector.”
Ekuinas' investments/divestments (Jan 2019 - Apr 2021)
|Date||Company||Deal Value ($)||Stake (%)||Industry||Total capital invested ($)|
|Feb 2021||Medispec (M) Sdn Bhd||undisclosed||-||Pharmaceutical||-|
|March 2019||Exabytes Capital||$10.72m||40||Cloud service||$10.72m|
|Oct 2020||Coolblog Apps Sdn Bhd||undisclosed||60||Retail - Food & beverages||12.38m|
|Aug 2020||PrimaBaguz Sdn Bhd||undisclosed||100||Food manufacturing||9.75m|
|July 2019||APIIT Lanka Pvt Ltd||undisclosed||45.9||Education||4.95m|
|Apr 2019||MediExpress Group||undisclosed||60||Healthcare||14.33m|
|Apr 2019||PMCare Sdn Bhd||undisclosed||60||Healthcare||5.11m|
|Source: Ekuinas website, annual report|
PE deal momentum to pick up in Malaysia
The government-linked PE fund is optimistic of an uptick in investment activity in Malaysia given the availability of surplus dry powder globally coupled with a low-interest rate regime.
“With an estimated $1.9 trillion in dry powder globally in a low-interest-rate environment, it is highly likely that the hunt for good assets will continue to be very competitive. It is no different for Malaysia. As a result, further PE interest in Malaysia is to be expected and welcomed. Growing competition will help to nurture further development for the Malaysian PE industry, and add to the vibrancy of PE deal-making in Malaysia,” Ekuinas said in a statement to DealStreetAsia.
In 2020, due to the speed and unprecedented impact of the pandemic, it noted that the PE market in Malaysia initially saw a sharp drop in terms of deal-making as fund managers shifted their focus on stabilising their portfolio companies.
Moving into 2021, PE investors demonstrated a bullish outlook on the backdrop of the worldwide vaccination rollout, the new US presidency and Brexit finally coming to a close. “This optimism is expected to continue over the next 12 months as investors look to effectively deploy the funds,” Ekuinas said.
Ekuinas has made cumulative investments in 42 companies since its inception in 2009, representing a total committed investment of 4.4 billion ringgit ($1.09 billion).
Ekuinas has direct exposure to homegrown companies such as sportswear retailer Al-Ikhsan Sports; private education group Cosmopoint; lighting solutions firm Davex (Malaysia); contract manufacturer Flexi Versa; offshore service vessels provider Icon Offshore; tanker operator Orkim; Manhattan Fish Market-owner Revenue Valley; and private higher education institution Unitar International University.
Ekuinas had, in October last year, divested its entire 60% holding in homegrown desserts and beverages firm Coolblog Apps Sdn Bhd to Singapore-based PE firm Archipelago Capital Partners. The divestment generated an internal rate of return of 6.4% for Ekuinas.
Prior to that, in August 2020, the PE firm had exited halal meat-based food maker PrimaBaguz Sdn Bhd to US-based Johnsonville International LLC for an enterprise value of RM175 million ($41.96 million).
Fund performance in 2019
|Fund||Gross IRR per annum|
|Ekuinas Direct (Tranche II)||13.5%|
|Ekuinas Direct (Tranche III)||-10.8%|
|Ekuinas Outsourced (Tranche I)||7.4%|
|Ekuinas Outsourced (Tranche II)||-5.2%|
|Source: Ekuinas annual report 2019|
The PE fund’s outsourced fund managers include Cope Private Equity, Navis, RM Capital Partners, TAEL Partners and Tremendous Asia Partners.