KUALA LUMPUR: Ekuiti Nasional Bhd (Ekuinas) foresees that the private equity market to remain subdued next year, due to lofty valuation expectations of entrepreneurs, according to its CEO Syed Yasir Arafat Syed Abd Kadir.
“This year, everybody is taking a very cautious view, in light of expanding multiples,” he told the media at the launch of The Malaysian Private Equity Forum 2019 today.
He opined that the overvaluation trend is likely to continue into next year.
Syed Yasir pointed out that there has been a number of deals in the private equity market earlier this year that he deemed expensive.
“Unfortunately, this has set the tone for some of the deals we are working on, people are expecting too high of valuation,” he said.
On the other hand, Ekuinas chairman Raja Tan Sri Arshad Raja Tun Uda highlighted that the private equity market in Asean is expected to hit US$70 billion (RM293.62 billion) in deal value by 2024.
He said that there is no shortage of opportunities on the horizon, prompting investors and other players to up their allocations to the asset class as part of their diversification strategy.
“We are indeed fortunate to be in the exciting region of growth that is paving the way for our markets to mature and thus, increase the appetite for expansion, mergers and acquisitions.”
He pointed out that the prospect of investing in the next world-class companies and rapid growth taking place across various sectors and countries in the region is promising.
“This promises abundant investment opportunities in Asean, creating the impetus for vibrant private equity activities in this region.”
However, he cautioned that investors need to understand the challenges of regional complexities and cross-border expansions.
Commenting on the Ekuinas’ 42.3% stake in loss-making Icon Offshore Bhd, Syed Yasir said the fund does not plan to exit from the investment in the short term.
“Our plan is to ensure the recapitalisation plan happen as soon as possible, so we could think about the next stage of growth for Icon Offshore.”
As of Sept 30, 2019, Ekuinas’ total fund under management stood at RM4.1 billion.
Last year, the fund divested its stake in Tranglo and MediExpress & PMCare, while it acquired Flexi Versa Group. In March, it acquired a 40% equity stake in Exabytes Capital for RM44 million.
Since its establishment in 2009, Ekuinas has invested into 23 companies.
