Malaysia’s Ekuinas earmarks up to 15% for tech deals

Ekuinas chairman Arshad Raja Uda (left) and CEO Syed Yasir Arafat Syed Abd Kadir at the launch of Ekuinas' 2018 annual report.

Malaysian government-linked private equity firm Ekuiti Nasional Bhd (Ekuiti) earmarks 10-15 per cent for technology investments, according to its CEO Syed Yasir Arafat Syed Abd Kadir.

“Tech investments are inevitable. You’ve seen tech investments growing tremendously across Asia Pacific and deal volumes have increased….Technology investments are sort of the domain of venture capital firms but as companies mature, a lot of PE money go into tech investments,” said Syed Yasir Arafat in the 2018 annual report media briefing today.

“So, what we’re seeing is that it’s a necessary area for us to look at and would like to put some capital into. But it’s not going to be a huge focus on us – we probably allocate 10-15 per cent of our fund in that area. Tech investments also help us to understand the trend that is coming to our traditional investments,” he added.

The PE firm has recently picked up a 40 per cent stake in Malaysia-based web hosting company Exabytes Capital Group for RM44 million ($10.7 million) – the second tech investment done by Ekuinas since its inception in 2009.

“Our thesis in Exabytes is simple – we see it as a fast-growing company. We found that Exabytes, as the market leader in Malaysia, is a platform that we can bring in further to hopefully become one of the top regional companies,” said Syed Yasir Arafat.

He also added that Ekuinas is ready to acquire stakes in subsidiaries of government-linked companies (GLCs). The firm has identified several companies that appear attractive and “high-level talks are already taking place.”

“A lot of these are smaller subsidiaries within a very large company, so there is no management focus. If we buy into these companies, it would be our primary investments and we will ensure that we will drive the company forward,” said Syed Yasir Arafat. “At the moment, it’s just high-level talks. It is subject to their internal plans and the whole direction of the company itself, but we are watching that space quite closely.”

For the financial year ended December 31, 2018, Ekuinas second fund (Tranche II), which has RM1 billion worth of committed capital, posted a gross portfolio return of RM490.1 million, generating annualised gross internal rate of return of 14 per cent and net IRR of 9.8 per cent. Its third fund (Tranche III) – RM1.5 billion – posted a gross portfolio return of RM53.5 million and an annualised gross IRR of 4.5 per cent. Both funds are fully deployed.

Ekuinas launched its fourth fund, Tranche IV, at RM1 billion with an option to increase to RM1.5 billion this January. The vehicle, which has an investment period of three to four years, will continue to invest in Malaysia-based businesses, with an emphasis on core sectors such as education, oil and gas, fast-moving consumer goods (FMCG), retail and leisure, healthcare and services.

In FY2018, Ekuinas committed a total of RM331.5 million to acquire two new companies and make three follow-on investments. In the same year, the PE firm also exited three companies – Tranglo, MediExpress Group and PMCare Sdn Bhd.

Tranglo generated gross proceeds of RM114.9 million, achieving an IRR of 26.9 per cent and a money multiple of 2x. Meanwhile, MediExpress Group and PMCare Sdn Bhd generated a minimum IRR of 38.8 per cent and a money multiple of 2.6 times of the capital invested.

“2019 will also see us crystallising our assets under Tranche II as part of our prudent investment strategy to secure positive IRR and ensuring the realisation of the fund is done within the expected timeline,” added Syed Yasir Arafat.

Established by the Malaysian government in September 2009, Ekuinas has invested in over 40 local mid-sized companies of various sectors except for property and construction sectors, with typical ticket sizes between RM50 million and RM300 million.

Also read:

Malaysia’s Ekuinas exits investments in MediExpress and PMCare

Malaysia’s Ekuinas picks 40% stake in Exabytes Capital Group

Intense competition in PE space may lead to distortion of asset value: Ekuinas

 

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.