Malaysia: ValueCap’s $4.7b injection not govt money, nor govt-guaranteed

The MYR20 billion ($4.69 billion) to be pumped into state equity investment firm ValueCap Sdn Bhd will not come from the government’s coffers nor have a government guarantee, Minister in the Prime Minister’s Department Abdul Wahid Omar reiterated.

Omar explained that the MYR20 billion would be sourced from ValueCap’s three shareholders – state investment arm Khazanah Nasional Bhd, pension fund Kumpulan Wang Persaraan (Diperbadankan) (KWAP), and equity investment firm Permodalan Nasional Bhd (PNB).

The minister had, a month ago, clarified the source of the funds to the local media. He had also noted that the injection will not affect the national Budget 2016, announced last Friday.

Also read: Malaysia: ValueCap shareholders to contribute $4.6b fresh funds announced by PM

Omar said, the fund would invest in undervalued listed companies with good fundamentals and long-term growth potential, and those investments would be carried out in stages, based on the right price and timing.

This will indirectly contribute positively towards the activities of listed companies and towards the economic growth of the country in general, he added.

The Prime Minister, when announcing the fund injection on September 14, had said the fund was to shore up the local stock market, which has been relentlessly hit by negative news – soft oil and commodity prices and allegations against state investment fund 1Malaysia Development Bhd (1MDB).

The fund from ValueCap’s shareholders would be supplied in terms of bonds, and external funds or other forms of capital will only be considered if it was approved by the board.

“The investment fund is not aimed at helping any [particular] company, be it bumiputera (native people) or non-bumiputera. The investment is based on the philosophy of long-term but not short-term investment.”

“It is based on the thorough and careful evaluation of the financial performance of the stocks,” Omar said, in a written reply to a member of parliament (MP), Khalid Samad last Thursday. The comments were made available to the press on Monday.

Omar mentioned that companies that declare good dividends and defensive stocks would be picked, such as Malayan Banking Bhd, United Plantations Bhd and real estate investment trusts with dividend yield of more than 5 per cent a year.

Khalid had asked the Prime Minister to state the source of the MYR20 billion that would be used to help the Malaysian stock market, and whether the ministry had made any research on whether the amount would be able to improve the current stock market.

On September 15, opposition party PKR’s secretary-general and MP Rafizi Ramli raised concern that the MYR20 billion would eventually be used to buy undervalued shares and that the fund would be directed to buy shares from companies that are deemed close to ruling party Barisan Nasional for the purpose of making short-term profits.

Omar noted that ValueCap had recorded a stellar performance with a return of equity investment of more than 16.3 per cent a year between 2003 and 2013.

As at end-2014, ValueCap had an accumulative profit of MYR8.5 billion, of which a total of MYR8.4 billion was allocated back to the shareholders in the form of dividends. The fund was established in 2002.

Related stories:

Investors harbour doubts over Malaysia’s stock market rescue plan

Malaysia’s Najib delivers $4.6b boost for stock market

Malaysia’s Valuecap plans to grow its AUM to $2b by year end

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.