Business

Tuesday November 10, 2009

Ekuinas 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: Ekuiti Nasional Bhd (Ekuinas), 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.

Ekuinas 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 Ekuinas 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 Ekuinas 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 Ekuinas 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 Ekuinas, 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 Ekuinas and the previous SPVs mooted by the Government, Abdul Rahman said: “Ekuinas 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 Ekuinas 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, Ekuinas 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 Ekuinas 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 Ekuinas 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 Ekuinas is to create the next generation of successful and leading Malaysian companies that are globally competitive,” he said.


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