Malaysia’s sovereign wealth fund Khazanah Nasional has defended its decision not to make an early investment in Southeast Asian ride-hailing and food delivery super-app Grab.
Chief Investment Officer Azmil Zahruddin told CNBC that the fund’s investment strategy is to focus on large investments rather than direct startup deals.
Khazanah failed to close an early financing deal for Malaysia-based Grab.
Other investors, including Singapore state investor Temasek, eventually took a stake in Grab and the ride-hailing giant moved its headquarters to Singapore. The company raised $4.5 billion and listed on Nasdaq in late 2021 through a SPAC merger with Altimeter Growth Corp, making Grab the largest US listing of a Southeast Asian company.
Hazana has been criticized for what some say is a “missed opportunity” for Malaysia.
Anthony Tan, CEO of Grab Holdings Inc., right, and Tan Hooy Ling, co-founder of Grab Holdings Inc., celebrate on stage during a bell-ringing ceremony as Grab begins trading on the Nasdaq, in Singapore, on Thursday , December 2, 2021
Ore Huiying | Bloomberg | Getty Images
“You have to look at what Khazanah is and what its DNA is,” Zahruddin said in an exclusive interview with “CNBC Squawk Box Asia” on Thursday.
“Our DNA is that we manage large investments. [Venture capital] investing is not really what we do, and it’s not really our experience and skill set.”
“So what we’re trying to do is, instead of trying to make these investments directly, we’re actually channeling investments into venture capital funds that then invest in companies in the region.”
However, Zahrudin agreed that it was important for Malaysia to support its entrepreneurs and retain its talent.
He said Khazanah will continue to help Malaysian start-ups through an indirect approach of investing in funding organizations that take a stake in these new companies and potentially invest directly in them once they reach a size that meets the fund’s investment criteria.
To that end, Zahruddin said Khazanah invested in Grab competitor Uber through an intermediary who was willing to invest in Uber at an early stage.
Khazanah’s investment in foreign Uber instead of Grab, which was started by two Malaysians, has raised eyebrows in the Malaysian investment community.
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Zahrudin said venture capital markets have been quite challenging and many endowment funds that have been active in venture capital have seen their investments drop by as much as 40% in the past year.
But Khazanah will continue to channel funds into the technology sector and has been doing so for the past 10 years.
“In hindsight, it’s a good thing we weren’t able to make direct investments anyway, because that’s something that’s quite challenging for anyone who’s been in venture capital,” Zahrudin said.
In hindsight, it’s a good thing we weren’t able to make direct investments anyway, because that’s something that’s quite challenging for anyone who’s been in virtual capital.
Azmil Zahrudin
Hazana National
Khazanah reported an almost 80% drop in annual earnings in 2021 to 670 million Malaysian ringgit, or $150.36 million. The year earlier, profits also fell by about 60% to RM$2.9 billion.
The sovereign wealth fund said the drop in profits was due to the continued expansion of financial support for its airlines and tourism investments suffering from Covid-19 disruptions.
Last month, Khazanah announced it would explore new investment opportunities in Turkey following a meeting between representatives of the fund and the Turkey Wealth Fund in Istanbul.
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