Najib has announced the setting-up of EKUINAS, a government instituted and backed private equity fund management company that supposedly will be allocated an initial RM500m and subsequently grow to a significant fund size of RM10b.
Although government owned, the proposed management and running of the company and funds under management is said to be handled by experts, private sector professionals or in my own terminology - PEPs or Private Equity Professionals.
The funds focus will be on high-growth potential sectors and Bumiputera companies with matching growth potential in their chosen industry sectors. At the time of publishing, the identified or targeted sectors which the administration has decided to be the focus of the funds investments is in the areas such as education, tourism, and oil and gas.
Based on the little information that is available so far in the public domain, it appears that the investment horizon and therefor the reach of the fund will extend beyond that currently avaible from PNB, EPF, PNS and the likes. It looks like the fund is willing to undertake higher risks and come in at a much earlier entry point in the business or company life-cycle. The fund also looks to offer funding for "real" or "big-ticket" private equity deals and transactions as it aims to facilitate mergers and acquisitions involving bumiputera-owned companies and other local and foreign entities. I think this is a good step in the right direction as at the moment there are no explicit sources of equity funding for M&A deals available to Malaysia promoters, whether it be for local or foreign acquisition growth.
So far EKUINAS and what it is being made to look like in the press, looks.....very interesting. The government however is still finalizing the structure and mechanisms. I am actually a bit excited about this fund. If truly it materializes they way it is currently proposed and presented, i believe a lot of good things will come out of it.