Malaysia Debt Ventures launches RM1b fund targeting tech firms

KUALA LUMPUR: Malaysia Debt Ventures Bhd (MDV), a wholly owned subsidiary of Minister of Finance Inc (MOF Inc), has launched a third fund amounting to RM1 billion, which could potentially benefit about 300 companies and finance up to 400 to 500 projects.

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, which is expected to be dished out in four rounds, also carries an interest rate of 8% for borrowings.

“For RM1 billion the government approves, we are able to fund about RM4.5 billion worth of projects,” MDV managing director Datuk Md Zubir Ansori Yahaya told reporters at the launching ceremony today.

Thus far, some 15 companies have been identified as potential borrowers of up to RM100 million.

Zubir said unlike MDV’s previous two funds which were catered to developed, mature and revenue-stage companies with clear and strong credit profiles, this fund will be focusing on technology-based companies that are in early stages of growth and development.

For the first round of the fund in 2002, MDV sourced RM1.6 billion from the Japanese Bank of International Cooperation (JBIC). Six years later, as part of the second tranche, it raised RM1.5 billion through the issuance of IMTN.

Established in 2002, MDV has disbursed more than RM11 billion in financing to more than 680 tech firms, which in turn aided these companies to complete and deliver 773 projects.

Also present at the event, Finance Minister II Datuk Seri Johari Abdul Ghani said there is a need for alternative funding to be made available to small and medium enterprises (SMEs) in the technology sector, which has a higher risk profile, which in turn makes it difficult to secure traditional funding.

The government has to date allocated more than RM17 billion through various initiatives to promote technology exports, financing and guarantees for SMEs, in a bid to bridge the digital divide and promote technology entrepreneurship.

Johari also alluded to an increase in allocation for these enterprises in Budget 2018, in view of the growing needs for financing for SMEs.

“Historically, every year you will see figures keep increasing based on the size of our gross domestic product (GDP),” Johari told reporters at the sidelines of the launch ceremony.

He said 98% of businesses in Malaysia are SMEs which contribute 36% and 18% to GDP and total exports respectively.

“I think it is a very significant portion of this ecosystem,” he added.