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 superapp Grab.
Chief Investment Officer Azmil Zahruddin told CNBC that the fund’s investment strategy was to focus on large investments — not direct seed deals.
TREASURY Could not close an early deal to fund Malaysia-based Grab.
Other investors, including Singaporean state investor Temasek, eventually took a stake in Grab and the ride-hailing giant moved its headquarters to Singapore. The company went on to raise $4.5 billion and list on the Nasdaq in late 2021 through a SPAC merger with Altimeter Growth Corp, making Grab the largest US listing by a Southeast Asian company.
Khazanah was criticized for what some have said was a “missed opportunity” for Malaysia.
Anthony Tan, chief executive officer of Grab Holdings Inc., center right, and Tan Hooi Ling, co-founder of Grab Holdings Inc., celebrate on stage during a ringing ceremony when Grab begins trading on the Nasdaq, in Singapore, on Thursday, 2 December 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 expertise and skills.”
“So what we try to do is, instead of trying to make those investments directly, we factor the investments into VC funds, who then invest in companies across the region.”
Zahruddin agreed, however, that it was important for Malaysia to support its entrepreneurs and retain its talent.
He said Khazanah will continue to help Malaysian startups through an indirect approach of investing in financiers participating in these new companies and potentially investing in them directly once they have matured to a size that meets the fund’s requirements. investment criteria.
To that end, Zahruddin said Khazanah invested in Grab competitor Uber through an intermediary financier who was willing to invest in Uber at an early stage.
Khazanah’s investment in foreign-owned Uber instead of Grab, which was started by two Malaysians, raised eyebrows in the Malaysian investment community.
Outlook for venture capital markets
Zahruddin said the venture capital markets have been quite challenging and many funds of funds that have been active in venture capital have seen their investments fall by as much as 40% in the past year.
But Khazanah will continue to allocate funds to the technology sector and has done so for the past 10 years.
“In hindsight, it’s a good thing we’re not able to do direct investment anyway, because that’s something that’s quite challenging for anyone who’s been in VC,” Zahruddin said.
On the other hand, it’s a good thing that we’re not able to do direct investment anyway, because that’s something that’s quite challenging for anyone who’s been in VC.
Azmil Zahruddin
National Treasury
Khazanah posted a nearly 80% drop in annual profits in 2021 to 670 million Malaysian ringgit, or $150.36 million. A year ago profits also fell about 60% to RM2.9 billion.
The sovereign wealth fund said the drop in profits was due to the continued expansion of financial aid to 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 from the fund and Turkey’s Wealth Fund in Istanbul.