Ekuinas records strong investment returns for 2020

Ekuinas CEO Syed Yasir Arafat Syed Abd Kadir said Ekuinas’ key focus for 2021 will be on intensifying deal sourcing and portfolio management, whilst maintaining the overall corporate strategic direction.

KUALA LUMPUR: Ekuiti Nasional Bhd’s (Ekuinas) total cumulative investment in the financial year ended Dec 31, 2020 was RM4.40bil in 42 companies and it generated a total economic deployment of RM5bil, together with private sector partners.

It said in a statement on Thursday through these investments, it increased the overall Bumiputera equity ownership to RM5.6bil, equivalent to 1.4 times the capital invested.

This led to the increase in total shareholders’ value to RM7bil, translating to 1.8 times the capital invested, it said.

Ekuinas Direct (Tranche II) Fund recorded a gross portfolio return of RM571.20mil, generating a gross internal rate of return (IRR) of 11.9% per annum and a net IRR of 8.2%.

However, Ekuinas Direct (Tranche III) Fund recorded a gross portfolio loss of RM75.40million, translating to a negative gross IRR of 3.2% p.a.

“The performance of Fund III represents an improvement of 7.6% as compared to 2019, reflecting Ekuinas’ stringent and comprehensive value creation plans (VCP) that were put in place for the respective portfolio companies to preserve businesses, restore competitiveness and execute turnarounds in their operational and financial performance, ” it said.

Commenting on its investments amid the global pandemic and slower economic growth, it remained active in its investment activities by committing RM250.20mil to strengthen its portfolio of companies.

During the year, Ekuinas acquired a majority stake in Medispec (M) Sdn Bhd, a leading distributor and marketer of local pharmaceutical and supplement products, marking Ekuinas’ entry into the healthcare and pharmaceutical space.

In addition, Ekuinas also committed to support its existing portfolio companies through follow-on investments in Icon Offshore Bhd and Flexi Versa Group.

“Notwithstanding the movement restrictions imposed, Ekuinas also completed the sale of its home-grown desserts and beverage company, Coolblog Apps Sdn Bhd. This divestment brought the company’s total realisation proceeds, including income from dividends and interests, to RM3.2bil, ” it said.

Ekuinas chairman Raja Tan Sri Arshad Raja Tun Uda said Ekuinas continued to execute its mandate – to support the overall ecosystem and communities in Malaysia, whilst building on the performance of its portfolio companies.

He said this was despite the sharp drop in economic activities and performance due to the pandemic and compounded by the already volatile markets, exacerbated by tenuous relations between major economies.

“Leveraging on the momentum built over the past 10 years since our establishment, we concentrated our efforts to accelerate the urgent needs of our investments and stakeholders during these unprecedented times.

“It was imperative that we quickly implemented and facilitated future-focused strategies such as operational improvements and enhancements of products and services for our portfolio companies to adapt to the changing business landscape, ” he added.

Within the same period, through its direct and outsourced funds, Ekuinas increased the Bumiputera equity ownership to RM5.6bil, which translates to 1.4 times the capital invested, as well as it increased the number of Bumiputera managers and employees in its portfolio companies by 13.3% and 10.5%, respectively.

Ekuinas CEO Syed Yasir Arafat Syed Abd Kadir said, “The year 2020 started off slow. Overall, private equity (PE) activities fell off sharply in the first quarter, as activities or decisions were put on hold due to the restrictions on travel as well as a pullback in sentiment, with confidence taking an abrupt turn for the worst.

“However, the disruption brought about by the pandemic did not last long and the PE industry saw a rapid rebound, as reflected in the third quarter numbers of 2020 (Q3 2020)[1].

“Against this backdrop, we calibrated our strategy for 2021 to prepare for future headwinds for our portfolio companies and ourselves.”

Syed Yasir Arafat said Ekuinas’ key focus for 2021 will be on intensifying deal sourcing and portfolio management, whilst maintaining the overall corporate strategic direction.

“We have built up a robust deal pipeline comprising quality and diverse potential investments and will continue to nurture deal flows through expanded deal criteria, supplemented by improved research and networking, ” he added.

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