Malaysia Debt Ventures, Kenanga IB set up fintech fund with RM300m target

In the initial investment phase, both MDV and Kenanga will equally contribute RM25mil each as seed capital towards the fund.

KUALA LUMPUR: Malaysia Debt Ventures Bhd (MDV) and Kenanga Investment Bank Bhd have set up a fintech fund with a target fund size of RM300mil.

In a joint statement on Wednesday, they said the fund’s objective is to support the growth of fintech companies and boost the venture capital (VC) industry in Malaysia.

Under the plan, MDV and Kenanga taking up the role of joint managers and co-investors on a pro-rata basis.

“In the initial investment phase, both MDV and Kenanga will equally contribute RM25mil each as seed capital towards the fund. The fund will primarily be used to finance fintech companies at various stages of its lifecycle and up to its pre-initial public offering, ” the statement said.

Importantly, both parties can leverage on each other’s strength and capabilities in the areas of equity and debt financing of fintech companies, proven investment capabilities, as well as access to capital markets to provide more comprehensive financing solutions.

MDV chairman, Khairul Azwan Harun said as the only financial institution in Malaysia offering venture debt financing as a complementary source of capital for technology start-ups, MDV was fully committed to continue developing the venture debt market in Malaysia.

As a developing nation, Malaysia funding ecosystem still favours the conventional financial institutions and capital markets as its main sources of financing.

“MDV, however, believes that the country’s economy would benefit from the development of the venture debt market as it is a common funding vehicle for tech start-ups in more developed markets to complement equity funding from VCs, ” he said.

Khairul Azwan pointed out the government’s intention to develop a vibrant and sustainable VC industry in Malaysia.

He said one of the ways to achieve this was by attracting more private sector participants in the VC funding ecosystem and this and this was again reiterated by the government in the MyDIGITAL initiative recently.

Kenanga Investment Bank Bhd group managing director Datuk Chay Wai Leong said MDV’s mission to catalyse growth of technology-driven enterprises was in line consistent with Kenanga’s commitment to digitalisation and innovation.

“We are pleased to join hands with MDV on this initiative to increase access to capital for the Fintech start-up sector in Malaysia.

“As a home-grown financial brand ourselves, Kenanga is committed to empowering entrepreneurial talent and this Fund will enable the unicorns of tomorrow to flourish so that tech is in the pole position to drive Malaysia’s post Covid-19 recovery, ” said

MDV’s chief executive officer, Nizam Mohamed Nadzri said the fund would focus on funding fintech companies as this segment of the technology market yields great potential for growth in addition to being the backbone to the realisation of the country’s digital economic agenda.

“The sector is facing tremendous growth arising from opportunities for Neo-banks and Fintech companies in core banking systems. The sector will also benefit from adoption of financial services by platform companies and other technology start-ups.

“We are looking to fund fintech companies with scalable and sustainable business models that provide innovative and disruptive technology-based product offerings, which benefit is able to be cascaded down to the community as a whole, ” he added.

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