KUALA LUMPUR: Local institutional funds have begun to gradually increase their investments in technology-related companies amid the maturing of the tech ecosystem.
The two most notable ones are Khazanah Nasional Bhd and Retirement Fund Inc (KWAP), which are allocating bigger funds to the technology space.
Following the success of its investment in Chinese e-commerce giant Alibaba, Khazanah managing director Tan Sri Azman Mokhtar said the fund had invested close to US$1bil (RM4.2bil) in about 25 technology-related companies worldwide.
“Currently, we have realised gains of US$1.4bil from our investment in Alibaba.
“From that gains, we are able to re-invest about US$1bil (RM4.2bil) in some 25 tech companies around the world, including in artificial intelligence,” he said on the sidelines of the Khazanah Megatrends Forum 2017.
Khazanah, which had invested about US$400mil in Alibaba ahead of the latter’s initial public offering, made a profit of about US$1bil after it sold some shares after the listing. It retains a stake in Alibaba.
The fund opened an office in San Francisco in 2013 to ramp up its investment in technology companies.
“We are not only invested in US-based tech companies, we also have an office in Beijing, China, and have invested in local companies,” Azman said.
It has been reported that Khazanah has made a total of 15 investments worth about US$410mil (RM1.72bil) in the US tech sector.
Its investment in the US represented 1.3% of its portfolio realisable asset value of RM145.3bil as at Dec 31, 2016.
Azman said that every year, Khazanah evaluated about 30 to 40 companies and invested in not more than 20 companies.
“Our current investee companies are doing well but they need to be cautious about this tech trend,” he said.
Meanwhile, KWAP, which manages RM134bil in funds, has earmarked about 1% or RM1.34bil for technology-based companies. Its chief executive officer Datuk Wan Kamaruzaman Wan Ahmad said the fund would invest gradually in the technology space.
“Our current investment in the technology space is still below our asset allocation limit. We will do this gradually and are looking at both local and overseas companies,” he told reporters at the forum.
KWAP made headlines with its US$30mil investment in cab-hailing company Uber last year.
“We have learnt a lot from our investment in Uber, and with that we can step up our investment in the technology space, going forward,” Wan Kamaruzaman said.
He said the fund had so far invested US$70mil in the technology space, of which US$40mil is invested in two tech funds.
“But we are not like venture capital or startup funds,” Wan Kamaruzaman pointed out, adding that there were a few companies and funds in the pipeline for potential investments.