KUALA LUMPUR: Khazanah Nasional Bhd and Permodalan Nasional Bhd (PNB) issued separate statements on Friday on their RM43.9 million losses after selling their stakes in e-commerce platform Fashion Valet Sdn Bhd for RM3.1 million.
Khazanah, in its statement, said its divestment from FashionValet represented a responsible exit to transfer ownership to a party that could help guide the latter to a new growth trajectory.
The sovereign wealth fund said its rationale for investing in FashionValet was anchored on the theme of offline-to-online e-commerce and a commitment to supporting Malaysian entrepreneurs and promising early-stage companies.
At the time, the company was a promising home-grown e-commerce fashion platform with more than 400 brands and 15,000 products on its platform, with an expected revenue growth of about 60% annually, it said, adding that Khazanah invested RM27 million to acquire a 9% stake in the company in 2018.
“Over the years, the company faced challenges, most of which were exacerbated by Covid-19, including in expanding its platform.
“This required FashionValet, under the guidance of its board of directors and shareholders, to shift focus from being an e-commerce platform for Southeast Asian brands to growing its wholly owned in-house brands, Duck and Lilit, in order to preserve the company’s operating margins and cash flow,“ said Khazanah.
Khazanah also said that FashionValet took measures to rationalise costs and streamline operations, but continued to face challenges, including in securing capital during the difficult fundraising environment in 2022-2023.
In late 2023, NXBT Partners, led by a seasoned Malaysian entrepreneur, offered to acquire existing shareholders’ stakes and inject capital into FashionValet.
“In view of the company’s urgent need for funds to continue operations and the fact that the investment had reached the end of its targeted holding period, Khazanah considered and accepted the offer,” it added.
The sovereign wealth fund noted that as part of its “Advancing Malaysia” strategy anchored on “A Nation that Creates” framework, it remains committed to transforming Malaysian firms of all sizes to increase national productivity and competitiveness, aligned with the GEAR-uP programme, led by the Ministry of Finance.
“We believe that the startup ecosystem is a vital engine for innovation, economic growth and job creation in Malaysia,“ it said.
Despite the higher inherent investment risks and challenges with early-stage companies, Khazanah said, it is fully dedicated to supporting local startups and will continue to promote their success and expansion.
Meanwhile, PNB, in a separate statement, clarified that its investment in FashionValet was made using its proprietary fund and not the unit trust funds under Amanah Saham Nasional Bhd (ASNB) subscribed by the public.
“We regret the loss incurred which amounted to RM18.7 million after sale proceeds received of RM1.3 million, but they should be viewed relative to RM337 billion in investment assets managed by PNB and the RM16.4 billion in investment income generated after accounting for this loss in the financial year 2023,” it said.
PNB said FashionValet represented a genuine venture capital investment aimed at supporting a high-potential bBumiputera company, but its business was unfortunately severely affected by Covid-19 and changes in retail trends.
To summarise, PNB Proprietary Fund, in 2018, participated in FashionValet’s Series C fundraising through a redeemable convertible preference shares investment of US$5 million (RM20 million) for a small minority stake.
This investment was made after going through PNB’s private investment detailed evaluation and due diligence process, and undertaken at a fair market value reflecting FashionValet’s robust growth trajectory, with revenue increasing by approximately 60% annually over the preceding three years.
“PNB recognises the risks and rewards in investing in venture capital and private equity, and as such, these investments are managed as a portfolio, with performance assessed on the overall portfolio rather than specific investments.
“To manage risks, strict limits and guardrails are adopted to ensure that investments are not concentrated and primarily funded by PNB’s proprietary fund, protecting ASNB unitholders from potential losses,” it added.
Going forward, Khazanah said, it will continue to invest responsibly and manage assets towards sustainable multigenerational returns for the country.
PNB, one of the largest fund management companies in the country, said it remained committed to being judicious and careful in its investment decisions, governed by a rigorous due diligence and approval process.
“This investment was also made by PNB in line with the government’s call for the government-linked investment companies at that time to support the growth of high potential bumiputera companies operating in the new economy,” said PNB. – Bernama
