KUALA LUMPUR: Khazanah Nasional Bhd’s experience with FashionValet Sdn Bhd would not deter it from investing in start-ups and venture capital projects, says Finance Minister II Datuk Seri Amir Hamzah Azizan.
“Khazanah’s investment in Fashion Valet was made seven years ago.
“Since then, there has been an overhaul in Khazanah’s investment approach. The process of choosing investments has also been tightened, including start-ups and venture capital,” he said during Minister Question Time in the Dewan Rakyat yesterday.
Amir Hamzah said despite venture capital’s high risk and uncertain nature, it has the potential to generate high returns and plays an important role in helping the country move to a high-income status.
Amir Hamzah said several “unexpected” factors contributed to the failure of FashionValet.
Among them is the impact of Covid-19 that led to the failure of its expansion to the brick-and-mortar space and eventual closure of physical stores.
“The changing trend of e-commerce platforms, with many modest fashion businesses using their platform or Facebook to sell their products, also took a toll on FashionValet.
“Therefore, the FashionValet platform had to be closed, and FashionValet had to shift its focus to its brands, which are dUCk and LILIT,” he said.
Aside from that, the firm also faced cash flow issues and challenges in raising funds.
“It tried to raise fresh funds to overcome the issue but existing shareholders, including Khazanah and Permodalan Nasional Bhd did not agree to take additional risks by increasing their investment in FashionValet,” he said, adding that the capital market too was challenging at that time, making FashionValet’s bid to raise funds unsuccessful.
Both Khazanah and PNB, in their capacity as minority shareholders, played a proactive role in helping FashionValet by providing strategic guidance and financial advice to the highest management of the company.
“However, the impact of the challenges faced by FashionValet was too great and the company’s financial situation deteriorated.
“To continue to operate and overcome the cash flow situation, FashionValet needed fresh funds immediately. But they did not receive many offers from new investors,” he said.
“The offers received were the best and agreed upon by all shareholders.
“Both Khazanah and PNB admit that the investments were not in line with the projected returns of their investment in FashionValet,” he added.
He said both Khazanah and PNB will continue to improve their administration and governance.
He added that as MACC investigations and internal audits are still ongoing, Khazanah and PNB should be given space until the process is over.
“The final findings will be used to improve governance and administration,” he said.
Amir Hamzah was responding to a question by Syerleena Abdul Rashid (PH-Bukit Bendera) on what caused the failure of Khazanah and PNB’s investment in FashionValet.
She also asked if there would be a change in position in investments in start-ups and venture capital following the issue.
