Malaysia’s public service retirement fund Kumpulan Wang Persaraan (KWAP) on Thursday launched a 500-million ringgit ($106.68 million) vehicle to invest in startups and venture capital funds over the next 18-24 months.
The aim of the early-stage Dana Perintis fund is to spur the nation’s venture capital (VC) and startup ecosystem.
The fund will allocate RM250 million, or 50% of the corpus, for direct investments into startups. The remaining part of the corpus will be put into a fund-of-funds to invest in venture capital funds. KWAP is seeking to select 10 VCs in total, from the 38 proposals received earlier this year.
“The goal of Dana Perintis is two-fold, to enhance the Malaysian early-stage ecosystem, and to generate attractive and sustainable risk-adjusted returns for KWAP and our stakeholders,” said KWAP chief investment officer Hazman Hilmi Sallahuddin during the fund launch.
“KWAP believes that the Malaysian venture capital and startup ecosystem is at a positive inflection point. Dana Perintis is aimed to be a bolt-on initiative to complement the efforts by other GLICs [government-linked investment companies] and government agencies, optimising synergy in the push towards a common goal, in line with the Ekonomi Madani framework,” he said.
Ekonomi Madani was a policy framework launched by the Malaysian government in July, which lays out several targets such as bolstering the country’s economic growth, as well as strategies to achieve them such as stronger project monitoring practices.
Hazman said that the final list of VC funds for the initiative will be selected by KWAP’s investment panel soon and that an announcement will be made sometime in Q4. “There are more than 30 matrixes that we look at [as criteria for selecting the VC funds], but if I could put it into six buckets, we look at the firm’s overview, their historical performance, [investment] terms, fundraising capability, and finally their network and what kind of market access they can bring,” he said.
Hazman said that the fund will prioritise Malaysian and Malaysia-focused VC funds. “But we are also cognisant of the need for us to bring in regional and global players to look into Malaysia. It’s not just about expanding Malaysian companies outside, but also bringing in global companies to look inside Malaysia,” he explained.
The vehicle will invest 25-50 million ringgit ($5.33 to $10.66 million) in each of the selected VCs, which can back companies from the seed to growth stages.
KWAP will make direct investments only in the Series B stage and onwards from a risk management perspective. KWAP is looking to directly invest in 10 to 20 companies, with ticket sizes currently flexible.
Dana Perintis fund will focus on sectors such as the silver economy, food security, education, energy transition, financial inclusion, and the digital economy. However, KWAP said that the investments need not be exclusively limited to the above sectors.
KWAP, which is responsible for the retirement savings of civil servants in Malaysia, manages a total fund size of approximately RM184.5 billion ($39.33 billion). According to Hazman, its gross investment income for the year stands at RM3.8 billion ($810 million).
