Ekuinas maps out investment strategy

Tags: Abdul Rahman Ahmad | Ekuinas | Investment

Written by Wong Min Wei
Friday, 04 September 2009 13:18

KUALA LUMPUR: The newly established government-linked private equity fund management, Ekuiti Nasional Bhd (Ekuinas) is planning a three to seven year investment horizon as it seeks companies with strong operations and profit track record but needs capital to grow further.

Its CEO Abdul Rahman Ahmad said on Sept 4 Ekuinas would want to be an active shareholder in the investee companies to drive growth. The minimum stake would be 20%, he told a media briefing.

He said Ekuinas would look for medium sized companies with high growth potential but it would abstain from businesses in the gaming, liquor, property and CONSTRUCTION [] industry.

Abdul Rahman added Ekuinas would back management buy-outs including existing subsidiaries of GLCs and MNCs as well as corporate sectors, adding it would assist existing companies to accelerate growth by increasing market access and extending presence in value chain.

"We will be flexible to look at the levels of the company depending on the industry it is in. We have no plans to impose track records such as revenue and profit on a company," he explained.

Rahman added Ekuinas had targeted double-digit returns on its investements and would adopt typical disclosure of global private equity firms on a progressive basis.

Asked to elaborate on the disclosuree, he replied: “It will be like Khazanah with the headline type" as sometimes it was important to keep information comfidential especially in the private sector in order to remain competitive.

Rahman said Ekuinas was expected to embark on its investments in the next six months and would have overall target returns measured based on its internal rate of returns (IRR), stressing clear KPIs would be formulated and set.

Ekuinas chairman Raja Tan Sri Arshad Raja Uda said Ekuinas would benchmark itself against similar global private equity firms with regards to the organisation’s shareholding structure, internal processes, corporate governance as well as peformance based companensation.

He pointed out Ekuinas would manage its own portfolio of investments as well as outsource some of its funds to capable private equity investment firms.

“Through Ekuinas, Bumiputra corporate equity ownership will be institutionalised to ensure New Economic Policy (NEP) objective are met on a sustainable basis,” he added.

On June 30, 2009, Prime Minister Datuk Seri Najib Tun Razak announced the formation of Ekuinas with an initial capital of RM500 million to invest in local companies with high potential growth and raise the level of Bumiputera participation in commercial activities. The fund will subsequently be enlarged to RM10 billion (inclusive of private capital).