Malaysian funds including MAVCAP likely to be reorganised by Ministry of Finance

Kuala Lumpur, Malaysia. Photo: Pixabay

Government-linked funds, including Malaysia Venture Capital Management Bhd (MAVCAP) and Malaysian Debt Ventures (MDV), are likely to undergo reorganisation by the Ministry of Finance.

According to a report by The Star, these funds are being considered for restructuring due to their sub-par performance and their inability to repay large amounts due to the government, despite years of reorganising efforts.

The report also claimed that MAVCAP intends to apply for a new allocation of RM100 million ($24.4 million) from the Ministry of Finance under the upcoming national budget for 2019 which will be presented by Prime Minister Mahathir Mohamad in early November.

In a statement to DEALSTREETASIA, MAVCAP, which is one of the oldest investment funds set up by the government for the VC sector, said the fund is awaiting details on the reorganisation efforts and is unable to comment at this point of time.

On the other hand, MAVCAP confirmed that the firm owes the government RM113 million ($27.56 million) out of the RM450-million ($109.8 million) allocation under the 8th Malaysian Plan.

“We are currently in the midst of discussing this with the government. As a venture capital company, MAVCAP remains committed to the highest standards of corporate governance and transparency,” said a spokesperson of the firm.

MAVCAP, however, did not answer this portal’s query about whether it is currently placed under review by the Malaysian government to gauge its relevance. The firm is currently led by Jamaludin Bujang, who joined the firm as CEO in 2011 and brings with him over a decade of investment banking experience.

MAVCAP has previously backed startups including Grab, Fashion Valet, Hermo, The Lorry, Katsana, Easy Parcel, Aerodyne and Carsome. It has also invested in local VC funds such as Teak Capital, Axiata Digital Innovation Fund and the Meranti Asean Growth Fund, a $200-million vehicle with Gobi Partners that made its first close at $50 million in August last year.

MAVCAP was said to be setting up two more investments funds, a $200-million green tech fund and an RM100-million ($24.4 million) e-commerce fund to invest across Southeast Asia.

Malaysian Debt Ventures making timely repayments, says CEO

MDV, an agency under Ministry of Finance Inc., which was established to provide financing to tech companies said that “it is the prerogative of the government to continuously monitor and review performances of funding agencies such as MDV”.

“In this regard, MDV provides periodic and quarterly updates of its corporate and industry development KPIs (key performance indexes) and submit our financial reports including annual report and audited accounts to the Ministry of Finance (MoF). At the commencement of every financial year, MDV will present our budget and business plan to MoF,” said the firm’s CEO, Nizam Mohamed Nadzri.

The agency claimed that it serves a key role in the Malaysian technology and startup financing ecosystem by providing term and revolving facilities.

“MDV has disbursed approximately RM11.5 billion ($2.8 billion) in financing to more than 800 projects since 2002, channelling these funds to more than 800 technology projects undertaken by 750 technology-based companies. MDV has fulfilled and will continue to fulfil its mandate in providing project and contract financing facilities to technology companies,” added Nizam.

As at June 30, MDV’s loan and financing portfolio stood at RM1.49 billion ($360 million), financed by government-guanranteed Islamic Medium-Term Notes (iMTN) and the firm’s share capital. The agency clarified that it does not receive funds directly from the government except for specialised programmes such as MDV Technology Acceleration and Commercialisation Scheme (MDV-TACT) where it received an allocation of RM50 million ($12.2 million) over the period of the 11th Malaysian plan. MDV’s current funds are raised from the capital markets via iMTN.

Since its inception, MDV has obtained three funds – an RM1.6 billion ($390 million) First Fund souced from The Japanese Bank for International Cooperation via the Malaysian government; an RM1.5-billion ($370 million) goverment guaranteed iMTN; and a combined limit of RM1 billion ($24.4 million) consisting of Islamic Syndicated Revolving Facilitiy from local financial institutions and an iMTN programme, also guaranteed by the government.

Commenting on the third financing facility, Nizam said: “This (RM1 billion facility) will serve to fund 400-500 technology companies in the medium to longer term. This new fund will also provide an allocation for our venture financing programme which enables MDV to extend financing to earlier stage companies, in particular technology startups financed by venture capital firms.”

Nizam elaborated that MDV has fully settled the RM1.6 billion ($390 million) First Fund in 2015 while the second fund consisting of RM1.5 billion ($370 million) iMTN has been fully drawn upon and MDV has been making full and timely payments due of RM600 million ($146.4 million) thus far. The remaining RM900 million ($219.5 million) will be fully repaid by 2023.

“To date, MDV has utilised RM230 million ($56.1 million) from the Third Fund facility to fund our financing programmes to technology companies and expects to gradually utilise the Third Fund by 2022.

“Notwithstanding MDV’s developmental role, we operate in a sustainable manner, and are pleased to inform that MDV has recorded a continued and uninterrupted profits for the last eight financial years up to December 31, 2017 with profits in aggregate amounting to RM130.5 million ($31.83 million). MDV has also paid dividends to the government for six consecutive financial years up to December 31, 2017, amounting to RM9.7 million ($2.37 million),” he said.

This portal also learnt that the funding agencies are still being placed under the purview of Ministry of Finance, although The Star report said that the government has placed these funds including Cradle Fund Sdn Bhd, Malaysia Industry-Government Group for High Technology, and Malaysian Green Technology Corp under the Ministry of Energy, Science, Technology, Environment and Climate Change.

The Ministry did not reply to queries posed by this portal.

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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.