online casino bluebook - online casino gambling guide, to top ranked online casinos and reviews of over 200 gambling related websites. www.onlinecasinobluebook.com also host a casino forum, blog, and casino news articles
PM: Ekuinas activities will benefit all Malaysians, economy
Written by Joseph Chin
Friday, 04 September 2009 14:06
KUALA LUMPUR: The Prime Minister said Ekuiti Nasional Berhad (Ekuinas), which unveiled its operational details and investment framework on Sept 4, would undertake activities which will benefit all Malaysians and the Malaysian economy.
Datuk Seri Najib Razak said through its investments, Ekuinas would play a major role in strengthening Bumiputera participation and at the same time, will forge genuine partnerships with non-Bumiputeras.
"Thus, as a result, Ekuinas activities will benefit all Malaysians and the Malaysian economy,” he said in a statement after Ekuinas's board of directors announced the operational details and investment framework.
At a press briefing, Ekuinas chairman Raja Tan Sri Arshad Raja Tun Uda said the organisation would be a Government-linked private equity fund management company that aims to create Malaysia’s next generation of leading companies, while promoting equitable and sustainable Bumiputera economic participation.
Ekuinas has been established as a wholly owned subsidiary of Yayasan Ekuiti Nasional, a Bumiputera trust.
Najib also announced Yayasan Ekuiti Nasional’s members of the board of trustees, of which he is the chairman.
The other members are Deputy Prime Minister Tan Sri Muhyiddin Mohd. Yassin; Minister in the Prime Minister’s Department Tan Sri Nor Mohamed Yakcop; Minister of International Trade and Industry Datuk Mustapa Mohamed; Second Finance Minister Datuk Seri Ahmad Husni Mohamad Hanadzlah; Secretary General of the Treasury Tan Sri Dr. Wan Abdul Aziz Wan Abdullah and Director General of the Economic Planning Unit Datuk Noriyah Ahmad.
At the press briefing, it was highlighted that Ekuinas would be commercially driven, utilising both public as well as private capital to invest in meaningful stakes in entities with strong potential for growth.
Ekuinas would invest in medium to large sized companies and would take an active investment role in growing its investee companies as well as enhance the quality of management. The investment decisions and selection of management by Ekuinas will be based on merit. It would build on success, supporting entrepreneurs with a proven track record.
Ekuinas would also build up companies through putting in place professional management with performance based compensation, including equity based incentives.
“We have a good number of highly talented Bumiputera professionals and we will enlarge the entrepreneur pool by making some of them professional-owner-managers,” said Najib.
The Prime Minister added Ekuinas would manage its own portfolio of investments as well as outsource some of its funds to capable private equity investment firms.
Najib also said a high level committee for Bumiputera Entrepreneurial Development will be formed to specifically focus on strengthening Bumiputera entrepreneurship within the start up and development phase.
This committee will report to him and will be chaired by Nor Mohamed. The committee will be based on the successful model of the Putrajaya Committee for GLC High Performance and is aimed at enhancing the effectiveness of entrepreneur development programmes undertaken by relevant Government-linked institutions.
Najib said the establishment of Ekuinas and the Putrajaya Committee reflects the Government’s approach of using multiple instruments to comprehensively address the challenges in developing Bumiputera and Malaysian entrepreneurs.
The private equity fund management firm be an active shareholder, driving growth and management changes, says its chief executive officer
Ekuiti Nasional Bhd (Ekuinas), a private equity fund management firm set up to boost Bumiputera participation in the economy, will start making investments in unlisted Malaysian companies in six months, its chief said.
The firm, with an initial fund size of RM500 million from the government, plans to invest in established, medium-sized companies that have high-growth potential but lack the capital to flourish on their own.
Ekuinas, which can also invest in non-Bumiputera companies, will consider investments in any sector except gaming, alcohol, property and construction, chief executive officer Abdul Rahman Ahmad said.
"We will be an active shareholder, driving growth and management changes. Small and passive shareholding will be disallowed," he said at a media briefing yesterday.
The firm, which eventually wants to raise its fund size to RM10 billion with the help of private capital, wants to benchmark itself against the best of global private equity firms.
Some of the renowned firms out there today include The Carlyle Group, Navis and the Blackstone Group.
Ekuinas' average investment in a company would be RM50 million, and the companies will be held for a duration of between three and seven years, Abdul Rahman said.
The firm, which has yet to set any key performance targets, generally intends to make at least double-digit returns on its investments, he said.
Ekuinas will manage its own portfolio of investments and also outsource some of the funds to capable private equity firms.
Its internally-managed fund will take on controlling stakes in companies and focus on areas such as management buyouts, and this could include subsidiaries of government-linked companies.
It may also partner private investors in deals.
The outsourced funds, however, will buy significant minority stakes and must raise outside capital at a ratio of at least 20 per cent for every ringgit given.
Ekuinas doesn't plan to invest in start-up companies, nor in those that are at the development or mature stages of business. This is because there are already existing institutions or programmes to help such companies.
"Generally, as long as we're convinced that the company is sound, has demonstrated enough of a track record - and in terms of years, this will depend on the type of industry it is in - then we'll look into those companies," Abdul Rahman said.
Chairman Tan Sri Arshad Raja Tun Uda said Ekuinas' focus will be to build Malaysia's next generation of leading companies.
It will put in place professional management with performance-based compensation, including equity-based incentives.
"Though Ekuinas, Bumiputera corporate equity ownership will be institutionalised to ensure New Economic Policy objectives are met on a sustainable basis," he said.
Ekuiti Nasional will outsource its work to other private equity firms as it seeks to raise money from the private sector
Ekuiti Nasional Bhd (Ekuinas), the newly set-up private equity fund management company, plans to call for proposals from other private equity firms keen to help it manage a slice of its RM10 billion fund in November this year.
Under its business model, the state-owned private equity fund will outsource its work to other firms as it seeks to raise money from the private sector as well.
Ekuinas has been set up to boost Bumiputera participation in the economy after the government scrapped a Bumiputera equity rule for initial public offerings.
"We will do the RFP (request for proposal) to solicit the interest level, probably in November," Ekuinas chief executive Abdul Rahman Ahmad told Business Times in an interview.
The RFP will be opened to both local and foreign private equity firms. These firms must raise outside capital at a ratio of at least 20 per cent for every ringgit given.
However, foreign private equity firms must raise more than that due to their international status and size. Ekuinas has yet to decide on the ratio.
Still, it is early days for Ekuinas. It is in the process of setting up operations since it was established early this month.
It will start making investments in unlisted Malaysian companies in six months, which is probably around February or March in 2010.
The firm, with an initial fund size of RM500 million from the government, plans to invest in established, medium-sized companies that have high-growth potential but lack the capital to flourish on their own.
Ekuinas, which can also invest in non-Bumiputera companies, will consider investments in any sector except gaming, alcohol, property and construction.
It aims to be an active shareholder, driving growth and management changes. The firm, which eventually wants to raise its fund size to RM10 billion, wants to benchmark itself against the best of global private equity firms.
State-owend private equity fund Ekuiti Nasional Bhd (Ekuinas) may take some listed companies private as one of its investment strategies.
Chief executive officer Abdul Rahman Ahmad said although the newly set-up fund's main aim is to invest in privately-held companies, it does not mean that Ekuinas cannot invest in listed firms.
However, these listed firms would still be deemed medium-sized and not large companies that are the domain of other government investment institutions such as Permodalan Nasional Bhd or Khazanah Nasional Bhd.
"A lot of SMEs (small and medium enterprises) in Malaysia are listed too. There may be opportunities to take them private. Malaysia has 900 listed companies, which I think is a bit too many and some of these companies should be in private hands," he told Business Times in an interview.
Ekuinas was set up to boost Bumiputera's interest in the economy after the government scrapped rules that gave them guaranteed stakes in initial public offerings (IPOs). Ekuinas would take control of companies in high-growth sectors and build these businesses to develop Bumiputera entrepreneurs and create jobs as well.
It also plans to invest around RM50 million to RM70 million in companies with a track record and they could then do IPOs after three or seven years.
Abdul Rahman also acknowledged concerns that it might not be easy for Ekuinas to gain control of its investments. He explained that the fund could have just 35 per cent, but because the shareholding is fragmented, it would end up as the single largest shareholder.
"When we talk about control, we are flexible. We are talking about meaningful control but more importantly, what we are aiming for is to be able to be active shareholders," he said.
Ekuinas is still studying its investment prospects, but is sticking to its plan of making the first move in six months or sometime at the end of March 2010. He declined to name any businesses or industries as it could mean that Ekuinas could end up paying more than it wanted.
So far, the government has budgeted RM500 million for Ekuinas, of which it has RM100 million ready to use for initial set-up investments. As for when it will receive the remaining RM9.5 billion, this will be made known by the government when it unveils the 10th Malaysia Plan, a five-year economic plan, next year.
Tuesday November 10, 2009 Equinas to unveil RM100m projects
By DANNY YAP
It’s the start of a slew of investment-grade projects under the SPV’s stable
KUALA LUMPUR: Equiti Nasional Bhd (Equinas), the private equity fund set up by the Government, is expected to unveil its maiden two major investments costing RM50mil each by February.
The special purpose vehicle (SPV) has been allocated an initial capital of RM500mil that will be enlarged to RM10bil eventually.
Equinas chief executive officer Abdul Rahman Ahmad said the fund had identified two major investments so far and these projects would be the start of a slew of investment grade projects under its stable.
“We are confident of investing in two projects by February and the details will be made then,” he told StarBiz yesterday.
He declined to identify the sectors that the projects were in.
However, Abdul Rahman said Equinas had identified sectors it planned to invest in – education, fast-moving consumer goods, oil and gas, medical and healthcare equipment, leisure and services.
“We believe these sectors have high growth potential,” he said, adding that Equinas would not invest or participate in businesses that had received support from existing SPVs set up for bumiputras.
Abdul Rahman said Equity National Foundation funded and owned Equinas and the pool of money would be held by Equity Capital Sdn Bhd under trust and guided by the Prime Minister and his deputy.
On the objective of Equinas, he said the government-linked company (GLC) would be totally commercially driven and its core management would comprise the “best Malaysians” and if these were unavailable, talent would be sourced abroad.
“But we believe there are adequate Malaysians locally or abroad that we can get to form the core team,” he said.
On return-on-investment (ROI), he said many private equity funds could achieve up to 20% ROI.
“As a government-linked fund, there’s a target of a minimum 10% ROI per annum. But of course, we would like to achieve better,” he said.
On the difference between Equinas and the previous SPVs mooted by the Government, Abdul Rahman said: “Equinas marks a slight policy shift in terms of approach from what we call a bumiputra quota-based system to a market-driven approach.”
He said Equinas was just one of the many new and existing policy instruments that the Government had come up with to increase bumiputra participation, albeit in a more targeted and result-oriented manner.
“While there is a bumiputra agenda, Equinas will invest purely in commercially-viable businesses with a Malaysian focus and there are three investment structures,” he said, adding that typically ROI on any investment would be in three to four years.
Abdul Rahman said Equinas could invest in GLCs, private limited companies and multinationals via management buyouts, mergers or acquisitions, or by taking over non-core assets of a company and injecting or hiring professionals to manage it.
Alternatively, “we could support or invest in bumiputra companies that have a good business model and growth potential. Or we could invest in commercially-viable foreign companies that have a Malaysian link or equity,” he said.
Abdul Rahman said Equinas may or may not take a controlling stake in a foreign entity under the third investment structure.
“It depends on the investment amount and if we have the expertise. If we have the inhouse capability it (taking a controlling stake) might be an option, otherwise we may take a minority stake and leave it (the management) to the experts.
“At the end of the day, the top objective of Equinas is to create the next generation of successful and leading Malaysian companies that are globally competitive,” he said.
The request, expected to start in late January 2010, seeks proposals from other private equity firms keen to help it manage close to RM300 million of funds
Ekuiti Nasional Bhd (Ekuinas), the government-linked private equity fund management company, will call for proposals from other private equity firms keen to help it manage close to RM300 million of funds next month.
Chief executive officer Abdul Rahman Ahmad said it expects to commence the request for proposal (RFP) in late January 2010, upon which a detailed evaluation and selection process will be undertaken to identify and select the outsourced private equity partners for Ekuinas.
The selection process will be based on a two-phase approach.
"Today's session is aimed at soliciting interest as well as feedback from third party private equity firms, while the second phase would be a RFP, where interested private equity firms would be asked to submit a detailed proposal," he said yesterday.
Over 50 private equity firms including independent, institutional and foreign fund management firms attended the briefing session.
Set up to enhance equitable Bumiputra economic participation via the building of Malaysia's next generation of leading companies, Ekuinas has been earmarked by the government to manage an initial fund of RM500 million, which would be subsequently increased to RM10 billion over time.
Ekuinas will manage these funds both internally as well as outsource to selected capable third party private equity firms.
Wednesday February 10, 2010 Ekuinas eyes minimum IRR of 12% a year
By DANNY YAP
But the firm aspires to better that target
PETALING JAYA: Ekuiti Nasional Bhd (Ekuinas), the government-linked private equity fund management company, aims to deliver a minimum internal rate of return (IRR) of 12% a year on its investments, said chief executive officer Datuk Abdul Rahman Ahmad.
IRR is the discount rate often used in capital budgeting that makes the net present value of all cashflows from a particular project equal to zero. “But we do aspire to deliver better IRR like some of the private equity funds around the globe that can deliver IRR’s of 20% per annum,” he said at a media briefing on Ekuinas’ Full Disclosure Policy and Investment Framework and Guidelines yesterday.
Abdul Rahman said Ekuinas also plans to make private equity investments directly into companies and indirectly in other private equity funds of up to RM5bil in total until 2015 under the Ninth and Tenth Malaysia Plans.
Datuk Abdul Rahman Ahmad (right) fielding questions at the media briefing on Tuesday. With him is Raja Tan Sri Arshad Raja Tun Uda.
On the IRR of 12%, Abdul Rahman said the company had studied the performance of 132 funds from emerging markets and an IRR of 12% was the average overall return on investments by the companies surveyed. Ekuinas plans to invest primarily in education, healthcare, services, retail, leisure, oil and gas industries as well as fast moving consumer goods.
“We will invest in reputable companies that have track record of at least one to three years and with significant growth potential. These sectors have been identified as the most attractive to invest. But we will maintain flexibility and may consider investing in other sectors based on prevailing market conditions,” Abdul Rahman said.
He added that Ekuinas would not invest in gaming, liquor, hedge funds, currencies, commodities, properties and contruction.
“We are looking for Malaysian companies with high growth potential as a preference. But Ekuinas will consider investing in international assets, if there are Malaysian shareholders or if the company has operations in Malaysia,” he said.
On direct investments, Abdul Rahman said Ekuinas would pursue buy-out transactions with a minimum investment size of RM30mil adding that “we want a meaningful effective stake of no less than 20% to enable Ekuinas to become an active shareholder.”
Ekuinas is expected to announce its first direct investment before the end of this month. The Ekuinas chief declined to elaborate, except to say that the investment would not be in a public listed company.
Meanwhile, Ekuinas chairman Raja Tan Sri Arshad Raja Tun Uda said the adoption of a full disclosure policy reflected Ekuinas’ commitment to transparency consistent with its role as a government-funded entity with high public interest.
The Government has so far allocated RM1.3bil to Ekuinas (RM500mil in the first tranche and RM700mil in the second), which will be raised to RM10bil over time, to promote equitable and sustainable bumiputera economic participation in the economy.
EKUITI Nasional Bhd (Ekuinas), the government-linked private equity fund management company, plans to buy a 20 per cent stake in oil and gas (O&G) services firm Tanjung Offshore Bhd for RM73.4 million.
This would be Ekuinas' second investment since its inception in September 2009 after buying a stake in Alliance Cosmetics Group.
In a statement issued yesterday, Ekuinas said the transaction involves the execution of two agreements, namely a subscription agreement to subscribe to 26 million new shares of Tanjung Offshore and acquisition of another 30.5 million existing shares in the company.
Both transactions will be undertaken at the same price of RM1.30 per share.
The transaction is primarily conditional upon approval by Tanjung Offshore shareholders at an extraordinary general meeting to be held in July.
"As one of Malaysia's emerging O&G total solutions provider, Tanjung Offshore satisfies Ekuinas' investment criteria," said Ekuinas chairman Raja Tan Sri Arshad Raja Tun Uda.
It meets one of Ekuinas' key investment objectives of backing quality homegrown Bumiputera businesses that have the potential to be among leading companies.
He said the proposed investment will provide Tanjung Offshore with additional capital to fund future expansion plans.
"It also provides a fair exit to a retired founder of the business," Raja Arshad said.
Tanjung Offshore was founded 20 years ago by its residing managing director Omar Khalid and former executive director Abdullah Hashim.
Omar, who holds a 40.8 per cent stake, will continue to lead the company and drive its expansion plans.
Tabung Haji, meanwhile, owns 7.9 per cent in the company.
Tanjung Offshore currently owns and operates 16 vessels, making it one of the leading players in the O&G upstream support services sector.
Meanwhile, Omar said Ekuinas' entry will help bring Tanjung Offshore to the next level of growth in its quest to aggressively expand its business, both domestic and in the region.
"This partnership will help us leverage on Ekuinas' capital as well as corporate expertise," he said.
Last year, Tanjung Offshore's revenue stood at RM649 million with a net profit of RM3 million.
Thursday June 24, 2010
Ekuinas should be different from other funds
Making a Point - By Jagdev Singh Sidhu
ONE thing you can say about Malaysia is that there is no shortage of government-backed institutions that have the money to invest in the stock market.
There is the Employees Provident Fund, Permodalan Nasional Bhd, Tabung Haji, Lembaga Tabung Angkatan Tentera, Kumpulan Wang Amanah Pencen, Khazanah Nasional Bhd, Valuecap, state funds and a host of other government bodies that invest in specific sectors.
Collectively, the value of the shares they own in listed companies is huge and makes direct or indirect government involvement in the key companies in the stock market overwhelmingly large.
The amount of cash that these funds wield is enormous and, as opportunities get scarcer over the years and the need to generate returns increases, some of those funds have dipped their toes into private equity.
The idea is that there is a lot more cream to scoop if money is poured into private equity. Those funds, instead of investing in companies that make houses and offices or manage hospitals, are now investing in the building of such properties and the ownership of those hospitals.
By entering into private equity, those funds are now in direct competition with rich individuals, who have the ability to make faster decisions that allow them to capture the more lucrative deals, or other banks or companies that have also emerged as players in this spectre of financing.
When Ekuiti Nasional Bhd (Ekuinas), a private equity firm established by the Government, invested in a listed company instead of an up-and-coming private company, I wondered if we should have more of the same.
Ekuinas was set up in September last year with an initial capital of RM500mil to invest in the next generation of bumiputra companies, strong Malaysian companies or non-core assets of listed companies and other government-linked companies. Its fund size would grow to RM10bil over time.
Ekuinas’ first major deal was a RM40mil investment in Alliance Cosmetics Group, an unlisted home-grown beauty and personal care company, which saw its revenue rise from RM51mil in 2005 to RM115mil in 2009.
Its second major purchase was a 20% stake in Tanjung Offshore Bhd last week, a company that is listed on the Main Market of Bursa Malaysia.
Ekuinas spent RM73.4mil to buy the shares in the company. Of that amount, RM33.8mil was injected into the company as fresh equity and RM39.65mil was to buy shares from an existing shareholder of the company.
Buying into Tanjung Offshore, apart from a drop in earnings last year, makes sense as it was showing good growth in profit in the years preceding 2009.
Furthermore, being involved in the oil and gas industry, Tanjung Offshore is also front and centre in the domestic oil and gas industry which is set to show more growth rapidly as Petroliam Nasional Bhd focuses more of its exploration and production at home as opposed to overseas.
The acquisition of Tanjung Offshore meets a key condition for Ekuinas where it would inject no less than RM30mil in any company and take a 20% stake, but it also created a host of questions.
Should the company buy over stakes from existing shareholders where the money would go to an individual rather than the company?
Will Ekuinas be shorter term in its investment horizon and will that create the spectre of a share overhang in the future for Tanjung Offshore?
And should it invest in listed companies, would the ACE Market be a more ideal ground for it to look at?
While the purchase of a listed company is fair and allowed under its setup, maybe it should be more willing to take on a little more risk being a private equity fund and invest in unlisted companies that are showing visible signs of progress in their growth phase rather than more established ones.
Investing in private companies may carry more risk but being listed is still no guarantee that any investment is safe and dry.
Just look up the number of PN17 companies on Bursa Malaysia and loss-making companies to know that the dynamics of business change over time.
Ekuinas should take a different tack from its other government-linked brethren. By investing in smaller companies that appear to have a commercial product or service and a well-charted growth plan will also fill a gap in what the country needs more of.
Doing so will also go some way to meet the call of the Government where it wants more innovation and entrepreneurship to be injected into the Malaysian business scene in its aim in becoming a high-income economy.
It should be investing in the future and potential of companies and not be worried about its hit rate.
Industries and the economy prosper when reasonable risks are taken. What there shouldn’t be is a repeat of the way we do things.
Deputy news editor Jagdev Singh Sidhu wonders if Malaysia were to qualify for the World Cup, would that be classified as a modern day miracle?
Monday June 28, 2010 Ekuinas to invest RM3.5b in 3 funds
By JAGDEV SINGH SIDHU
It also allocates RM1bil for outsourced funds
KUALA LUMPUR: Ekuiti Nasional Bhd (Ekuinas), which is looking to invest in mid-sized listed firms, will be pumping RM3.5bil into three separate funds and allocating RM1bil for outsourced funds as it seeks new business avenues to meet its investment objectives.
This would be done to invest the RM4.5bil it will receive from the Government under the 10th Malaysia Plan. Together with the RM500mil in initial capital, Ekuinas will have RM5bil to invest over the next five years.
“The first RM500mil has been allocated. The idea is to have a two-year rolling plan where RM2bil will be allocated in the first two years. So it’s basically RM1bil a year,’’ chief executive officer Datuk Abdul Rahman Ahmad said.
“We are looking at mid-sized companies with growth potential and to back them,’’ he told StarBiz in an interview.
Rahman said Ekuinas had a fixed horizon of between three and four years for it to realise the value of its investments but it would allow its investments to simmer up to seven years if needed.
»We are looking at mid-sized companies with growth potential« DATUK ABDUL RAHMAN AHMAD
He said the idea of investing money in companies and taking equity was to help those companies realise their growth potential, and that Ekuinas would exit after helping them fulfil the objectives.
“We are not precluded from looking at public-listed companies, as in Malaysia they form the major portion of available mid-sized companies that are looking at growth,’’ he said.
The money for the investments would be put into silos of around RM1bil each, from which Ekuinas would draw for the direct investments it makes.
The purpose of separating the money, which Rahman said was the norm for private equity firms, was for the ease of calculating returns and instilling discipline in investing.
Once the fund reaches its objective, it would be closed and the money and, hopefully, profit would be rolled over into a new fund.
“The trustee’s instruction for the time being is to reinvest the money. The key thing is sustainability and that is the immediate focus,’’ he said.
For the outsourced funds’ portion of its operations, Rahman said the process took off in December and that 50 parties had indicated their interest.
To-date, 21 have submitted detailed proposals.
“We are in the tail-end in terms of selection,’’ he said.
The outsourced funds would look at smaller investments of up to RM15mil each compared with the direct investment fund which does deals of a minimum RM30mil in size.
The other difference between the two is that its partners in the outsourced funds must commit 20% of their own capital into the fund before managing the money for Ekuinas.
“Effectively you expand the pool of capital. The outsourced funds will look at smaller companies and they will be more growth capital,’’ he said.
Ekuinas, which was set up by the Government in September last year, is one of few government-owned private equity funds worldwide. While it has a social objective of raising bumiputra equity and participation in business, it has set out a target of delivering a return of 12% a year on its investments.
So far it has made two deals. The first was in a cosmetic firm Alliance Cosmetic Group, where it invested RM40mil in a vehicle that would control 80% of the cosmetic maker together with Navis Capital Partners.
The second and most recent was when it paid RM73.4mil to buy a 20% stake in Tanjung Offshore Bhd.
Being backed by taxpayer money might put Ekuinas under more scrutiny than other private-money-run funds and the nature of the first few deals has shown that it is threading carefully in building the business from ground up.
“We try to be as careful as we can in the first few deals. If there is failure then the confidence of the public will be less, so we are a little bit more cautious in the early part of our investments,’’ he said.
And the public should not expect 100% success from Ekuinas’ foray into the world of private equity. Rahman points out that even the best has a success rate of between 60% and 70%, a rate the company is striving to achieve.
He said Ekuinas had to take some sort of risk but as long as the best judgement in investment was made, “then on average we will be able to deliver what we sought out to do.”
“As long as we are disciplined and vigorous, we will be able to make this work.”
Ekuinas aims to complete four deals in its first year.
In terms of deals, Ekuinas feels that it is creating a different niche than other government entities that fund various companies at different stages of development in a variety of industries.
“The biggest thing we wanted to avoid was overlap. We wanted to take a role where no one is looking at and we defined that area as growth stage,’’ he said.
Rahman said Ekuinas was not interested in greenfield companies or startups.
Companies that it invests in must have some sort of track record with some operations that are churning revenue.
“It’s a company that is looking to grow into the next level so it has high growth potential,’’ he said.
It feels that listed companies offer a rich pool to invest in as there are a vast number of firms listed on Bursa Malaysia that meet its criteria.
Its focus is on six sectors: education, oil and gas, fast-moving consumer goods, healthcare, retail and leisure, and services. It feels there are a number of companies with growth potential that are already listed on the stock exchange and that has to do with the preference and ease of companies to float right after their development stage.
There is a risk in investing in smaller companies as there are a number of high-profile failures in smaller companies on Bursa. Rahman acknowledges that and is quick to say none of the deals Ekuinas makes will be risk-free.
“That’s where due diligence and the valuation process is important,’’ he said, reiterating that private equity had failure rates but that’s the job.
Listings today, however, are not as common as in the past, and with more companies trading at low valuations, the pickings for Ekuinas are there.
Rahman said the slowdown in listing was actually beneficial for private equity firms as it now gave them an avenue to engage with the owners of such companies to see how their businesses could be grown with the assistance of private equity firms.
He said that while there were a lot of listed companies with low valuations on the stock market, not all of them might be ideal investments.
“Some of them might have low PEs (or price/earnings) because of the wrong reason,’’ he joked.
Rahman hopes Ekuinas, like private equity worldwide, could also be a catalyst for mergers and acquisitions.
One of the main differences between Ekuinas and the run-of-the-mill private equity firms elsewhere is the social objective that it is entrusted to deliver.
That overriding objective could have an impact on diluting returns below the 12% target and it was a subject that Rahman said was debated at length within the offices of Ekuinas.
“There are instances where the social agenda and financial returns may collide.
“When we were asked to have that, we met up with similar funds that have social objectives which are predominantly World Bank fund or CDC (Commonwealth Development Corp) funds.
“Their common advice was to focus on financial discipline. Social objectives will be delivered if you invest in financially good companies. If you invest in bad companies then the social objective won’t be achieved,’’ he said.
