Ekuinas portfolio resilient in 2021 despite pandemic challenges

by S BIRRUNTHA / Pic by TMR FILE 

EKUITI Nasional Bhd (Ekuinas) has recorded a total cumulative investment of RM4.4 billion for the financial year 2021 (FY21) and continued to bring value to the portfolio company despite withstanding a challenging environment.

The total cumulative investment comprises 70 investments and consequently generated a total economic deployment of RM5 billion, together with private sector partners.

The government-linked private equity (PE) firm increased the overall Bumiputera equity ownership by RM5.9 billion, equivalent to 1.5 times the capital invested and total shareholders’ value by RM7.7 billion, translating to two times the capital invested.

In terms of direct investments, the Ekuinas Direct (Tranche II) Fund recorded strong growth with a gross portfolio return of RM654 million, generating a gross internal rate of return (IRR) of 12.1% per annum (pa) and a net IRR of 8.6%.

Ekuinas Direct (Tranche III) Fund recorded a gross portfolio loss of RM125.3 million, translating to a negative gross IRR of -4.3% pa.

Its outsourced investments, Ekuinas Outsourced (Tranche I), recorded a gross portfolio return of RM60.5 million, achieving a gross IRR of 3.3% pa and a net IRR of 2.5% pa, while Ekuinas Outsourced (Tranche II) Fund recorded a gross portfolio loss of RM4.4 million, translating to a negative gross IRR of -0.8% pa.

Ekuinas chairman Raja Tan Sri Arshad Raja Tun Uda said 2021 tested Ekuinas’ resilience as a PE given the uncertain and challenging economic environment brought on by the Covid-19 pandemic and resulting lockdowns.

He said the company remained active in efforts to preserve its portfolio performance in a volatile environment and create long-term value for its investors, companies, people and the wider community.

“The year proved our ability to successfully navigate through this environment with the implementation of robust business continuity plans focused on building resilience, maximising operations under various restrictions and leveraging cost containment structures that were perfected in 2020.

“Apart from economic objectives, achieving social objectives is equally key to delivering on our mandate,” he said during Ekuinas’ 2021 result announcement in Kuala Lumpur today.

Raja Arshad added in FY21, Ekuinas successfully increased the total Bumiputera equity ownership in our portfolio companies to RM5.9 billion, or 1.5 times of capital invested, compared to RM5.6 billion in 2020.

The firm helped to increase the pool of Bumiputera managers and employees by 19.4% for Bumiputera managers and 12.3% for Bumiputera employees, up from 13.3% and 10.5% respectively in 2020.

“These have contributed towards increasing the total shareholders’ value for portfolio companies to RM7.7 billion, or two times of the invested capital compared to RM7 billion in the previous year, reflecting Ekuinas’ success in leveraging on the PE business model to promote wealth creation for Bumiputeras and all Malaysians,” he added.

Ekuinas CEO Syed Yasir Arafat Syed Abd Kadir (picture) said 2021 has certainly been a year of continued change and adaptation, which demanded resilience, agility, discipline and saw the accelerated push for greater digitalisation, and with that, enhanced innovation in all industries including the PE space.

He said the PE market’s performance in Malaysia was relatively subdued despite growth in funds and asset allocation with the Covid-19 pandemic situation mid-2021 delaying broad-based recovery in economic activity.

He said with the steady and gradual rebound, the firm is ready to capitalise on opportunities that are aligned with its investment strategies.

“Our investment strategy has always been for the long term. Volatile market masks the true value of companies, hence, we made a conscious decision to keep our cash reserves intact in spite of the healthy investment pipeline.

“We executed one follow-on investment of RM11 million in Orkim Sdn Bhd which was completed in April 2021 to support the company’s working capital requirements as well as fund the start-up costs of newly-built vessels,” he added.

Syed Yasir Arafat said Ekuinas plans to invest RM400 million in technology, healthcare and electronic production services this year.  

He added Ekuinas does not plan to undertake any disposals this year.