Amid a slowing economy that has seen further disruption due to the COVID-19 pandemic, Malaysia’s COPE Private Equity sees an opportunity to access quality deals.
Business activities in Malaysia are resuming as the country gradually eased coronavirus lockdown measures. Almost all businesses are allowed to reopen, albeit subject to strict conditions, in the so-called conditional movement control order (CMCO).
Still, the World Bank has cut Malaysia’s 2020 GDP growth forecast to a negative 0.1 per cent, as stay-home orders froze economic activity for almost two months. Similar measures across the globe, which have slowed trade, further compound the challenges for Malaysia’s export-oriented economy.
“While COVID-19 is an unprecedented human tragedy which spares no one, the silver lining is that the economic downturn provides us access to quality businesses which may not otherwise be available,” COPE Private Equity founder and managing director Azam Azman told DealStreetAsia. “This access to quality deals, coupled with reasonable valuations and operational improvements, will hopefully work together to drive alpha returns over the next few years.”
COPE, which has invested in oil and gas companies such as the now-listed Serba Dinamik Holdings Bhd and Daya Material Bhd, also expects the downturn in the oil and gas sector to spur consolidation among industry players in Malaysia. However, the pricing gap between buyers and sellers may take time to narrow, said Azam.
COPE, which is also a Shariah-compliant private equity firm, will continue to favour sectors that fulfil large consumer needs such as energy, healthcare, education, food production, medical devices and engineering maintenance services, among others.
Established in 2005, COPE has 600 million ringgit ($138 million) of assets under management. Its portfolio includes aluminium and zinc die casting business STX Precision Group, fruit retailer MBG Holdings, school uniforms maker and distributor My Sutera Holdings, IoT company MDT Innovations and laundromat chain Cleanpro.
Edited excerpts of an interview: