KUALA LUMPUR, April 16 — The year 2019 saw a 7.6 per cent decrease in investment activity by venture capital (VC) and private equity (PE) companies to RM566.37 million from RM613.28 million in 2018.
The Securities Commission Malaysia (SC) in its Annual Report 2019 released today, said at the end of the year under review, the total cumulative investments stood at RM2.96 billion.
It said total committed funds in the industry as at the end of 2019 slipped to RM5.998 billion compared with RM6.08 billion in 2018 mainly due to some funds meeting the end of their tenure.
According to the report, the total number of registered corporations increased to 122 as at December 31, 2019 comprising 105 in the VC segment and 17 PEs while the number of investee companies decreased from 387 in 2018 to 304 in 2019.
The top three registered corporations by amount of investor commitments as at end 2019 were Xeraya Capital, Malaysia Venture Capital Management Bhd (MAVCAP) and COPE Private Equity Sdn Bhd.
“There was an increase in divestment activity from RM161.0 million in 2018 to RM631.16 million in 2019. The divestments were either partial or full, involving 149 investee companies in 2019, compared with 75 companies in 2018.
“Divestments saw a sharp increase during the year, largely due to the restructuring exercise of a major VC firm that saw a number of investments exiting through trade sale or share buybacks, or written-off,” said the SC.
It noted that Public funds remained the largest source of capital for the industry with government agencies and investment companies making up 41.1 per cent while sovereign wealth funds contributed 24.4 per cent.
Private sector contribution to the industry were led by corporate investors (21.5 per cent), followed by pension and provident funds (5.4 per cent), asset managers (34 per cent) and individual investors and family offices (2.8 per cent).
Growth investments saw a significant share of deal activity in 2019 with a total of RM387.22 million invested in 63 companies, representing 73.3 per cent, followed by early stage investments with RM167.72 million and 29.6 per cent share.
Share of investments into IT and communications remained steady at 22.76 per cent, while manufacturing and life sciences decreased to 1.22 per cent and 28.16 per cent respectively.
“Other sectors recorded a significant increase in investments in 2019 with a share of 47.86 per cent, including in wholesale and retail trading, logistics and financial services.
The SC added that divestments in 2019 were also mainly in investee companies in the growth stage amounting to approximately RM316.30 million, representing 50.1 per cent of total divestments during the year. — Bernama
