SG-based PE firm Ikhlas Capital to acquire 10% stake in Malaysia’s Pelikan

Nazir Razak. Photographer: Charles Pertwee/Bloomberg

Malaysian stationery maker Pelikan International Corp Bhd is close to raising 21.39 million ringgit ($5 million) from Singapore-based private equity firm Ikhlas Capital in lieu of 10 per cent stake.

In a stock filing on Thursday, Pelikan said it plans to undertake a private placement of 54.8 million new shares at 39 sen each to Merit Plus Ventures Ltd, a company ultimately owned by Ikhlas Capital.

The funds raised will be used for working capital, including market expansion and repyament of borrowings. Listed on Bursa Malaysia, Pelikan is an international manufacturer of quality paper, office and stationery supplies.

The private placement exercise is expected to be completed by this quarter. Pelikand is the Malaysian subsidiary of Pelikan Group GmbH, which is headquartered in Berlin. It is an international manufacturer of quality paper, office and stationery supplies.

“The new equity participation springboards Pelikan’s plans to enhance its market participation in the Asia region, which now only comprises about 5 per cent of its global turnover,” Pelikan said in a press statement on Thursday. “The current plans of the group are to grow the under-represented markets such as those within the Asean region, as well as China, which have much higher growth potential given their population and economic growth relative to more mature markets in Europe.”

According to The Edge Malaysia, who is the first to report about the deal as well as the fund, the Pelikan investment is Ikhlas Capital’s maiden deal.

Citing sources, it reported that Ikhlas Capital is on the road to raise between $500 million and $700 million for its debut fund, which has a hard cap of $1 billion. The final close is most likely to be held later this year.

According to Ikhlas Capital’s website, the private equity firm looks to invest in four main sectors – consumer, financial services, transportation/logistics as well as technology. It claims have a strong focus on Southeast Asia, which is deemed as one of the fastest growing regions in the world.

“Despite having declared itself as an economic community in 2015, economic integration remains nascent [in ASEAN], with huge potential for businesses to grow and collaborate across borders. We will be catalysts for ASEAN economic integration for the region to fulfil its true potential,” said the firm on its website.

The private equity firm is founded by former chairman of CIMB Group Holdings Bhd, Nazir Razak, who is also the younger brother of former Malaysian Prime Minister Najib Razak.

Ikhlas Capital has been widely speculated to be a post-retirement plan for Nazir, who stepped down from CIMB Group late last year. Other partners in the fund include CIMB Group’s former chief financial officer Kenny Kim, Indonesia’s former trade minister Irawan Wirjawan, and the Philippines’ fomer finance secretary Cesar Purisima.

It seems that the firm has also roped in several senior investment executives to be a part of the team. These include names like Jein Nern Tay, who was the head of Southeast Asia for AIF Capital, a mid-market pan-Asian private equity firm. Former COO of One North Capital, Bennette Ng has also joined Ikhlas Capital as its chief financial officer.

Another interesting hire is Nimalan Balasingham, who has joined the firm as a senior associate. Previously, he was with Kuala Lumpur-headquartered private equity firm Creador. He also spent over four years as the assistant vice president with Malaysia’s sovereign wealth fund Khazanah Nasional Bhd.

Ikhlas Capital is not the only one that is eyeing to generate higher returns from the Southeast Asia boom. The region has seen several global players allocating a significant amount of capital, including US-based Warburg Pincus, that has just closed a $4.25 billion fund dedicated to China and Southeast Asia.

One of the more prominent regional investors, Creador, has also scooped up $565 million for its fourth fund, exceeding its hard cap of $550 million, to invest across Southeast Asia. We reported that it is looking to list one of its Malaysian portfolio firms, Mr. D.I.Y. on Bursa Malaysia by year-end in an IPO that could raise as much as 1.5 billion ringgit ($355 million).

Singapore-based Southern Capital, who also has a major focus on Southeast Asia, gathered about $500 million for its fourth fund early this year. The firm recently shelled out 1 billion ringgit ($237 million) to take over the creamer business of Bursa Malaysia-listed Can-One Bhd.

Another Malaysia-based firm Navis Capital is currently on the road to raise around $1.75 billion for its eight vehicle, which has a hard cap of $1.9 billion. The fund held its first close this April.