by DASHVEENJIT KAUR / pic by ISMAIL CHE RUS
Malaysia Debt Ventures Bhd (MDV), a unit under Minister of Finance Inc, is targeting to reduce its net non-performing financing (NPF) rate to 4% for the financial year ending Dec 31, 2019 (FY19), from 9% last year.
Newly appointed non-executive chairman Datuk Seri Lee Kah Choon said as a local technology financier, it is inevitable that MDV is exposed to higher risk, making default rate an ongoing concern.
“Our NPF rate is generally higher than of any traditional bank because MDV provides financing to new technology firms, which comes with an elevated level of risk,” he told a media briefing in Kuala Lumpur yesterday.
Lee added that the gross NPF in 2018 stood at 24% and MDV intends to pare it down to 14% by year-end.
Meanwhile, MDV CEO Nizam Mohamed Nadzri said the group is actively working with its customers by sorting out a repayment schedule.
“For example, we will source cashflow from other projects or from other income for them.
He also said the group also has a high recovery rate of about 80%, despite its relatively higher default rate.
This has enabled MDV to repay all of its loans; sukuk or government loans.
To date, MDV is financing 63 companies and 73 projects in the green technology sector with 150MW of renewable energy (RE).
“MDV’s financing exposure for green technology stands at RM810.7 million comprising RM519 million on RE and RM134.58 million on energy efficiency.
“Currently, MDV stands as the only energy performance contracting financier in Malaysia,” Nizam said.
In 2018, MDV disbursed a total financing of RM1.31 billion in various technological sectors, with RE accounting for the biggest portion of lending at RM448.69 million.
On MDV’s third fund amounting to RM1 billion that was launched in September 2017, Nizam said the group has approved RM350 million as of last year, benefitting 40 companies.
The fund, which is to be raised through the issuance of Islamic medium-term notes (IMTN), has a tenure of 20 years and could see a potential disbursement of RM4 billion within the period.
The fund is expected to be dished out in four rounds with an interest rate of 8% for borrowings.
“From the loans that we approved, every month we get a return of between RM20 million and RM30 million in repayments,” said Nizam.
The third fund focuses on technology-based companies that are in early stages of growth and development.
Since its establishment, MDV has disbursed RM11.7 billion in financing to 758 technology companies, resulting in the completion and delivery of 878 projects.
On top of that, MDV has assisted in building 5,900 3G/4G towers and contributed in generating RM21 billion to revenue and 25,000 employments.