Malaysian government gives co-investment boost to PE and VC

Capital will be deployed through state-linked investment funds into new growth areas, according to the finance ministry’s 2019 budget.

The Malaysian government will allocate almost half a billion dollars to co-invest alongside private equity and venture capital funds via a matching scheme.

The capital – 2 billion Malaysian ringgit ($478 million; €422 million) – will be deployed via government-linked investment funds as part of the government’s push to support digital technology and entrepreneurship in the country, finance minister Lim Guan Eng said in speech to parliament outlining the 2019 budget on Friday.

The fund will focus on strategic sectors and new growth areas for Malaysia, such as updated manufacturing that incorporates data exchange and automation, a trend known as industry 4.0. No other financial details were disclosed.

The government will also allocate an additional 50 million ringgit to set up a co-investment fund to invest with private investors via new alternative financing platforms involving equity crowdfunding and peer-to-peer lending, Lim said.

Brahmal Vasudevan, founder of Kuala Lumpur-headquartered mid-market firm Creador noted that Malaysian private equity is “small, with only a handful of active players”.

Navis Capital Partners, which is raising its seventh flagship fund targeting $1.75 million, and Creador, raising its fourth fund with a $500 million target, are among the active GPs in the country. State-backed Ekuinas, meanwhile, is eyeing an approximately $400 million target for its fourth vehicle, that will be launched by year-end.

Private equity and venture-backed investments last year reached 417.8 million Malaysian ringgit, lower than the 569.5 million ringgit recorded in 2016, according to the Securities Commission Malaysia 2017 annual report.

The total committed capital to the industry as of the end of 2017 reached 7 billion ringgit, slightly higher than the previous year’s 6.5 billion ringgit.