Equity investors contribute to the recovery of local SMEs post-Covid

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To be patient is to endure short-term trials for future reward because “patience is bitter, but its fruit is sweet”

Photo by MUHD AMIN NAHARUL

WHEN Covid-19 hit Malaysia over a year ago, the government’s top priority was to fight the pandemic and overcome any health emergencies that followed. Hopes for triumph were further strengthened with the availability of vaccines at the beginning of this year.

With around 17% of the population having received at least the first dose, efforts to contain the pandemic are becoming slightly manageable. This subsequently diverted attention from efforts to pull the country out of the economic recession caused by the pandemic, while being limited to some degree of limitations stemming from the imposition of the Total Movement Control Order. (OCAF).

Unlike previous economic recessions, this was not caused by failures in the financial system, as such, entities such as investment or private equity (PE) companies are now piled up with money. dry powder from inactive or limited investment activities, while companies are keen to get back to “normal” with a renewed perspective on survival.

This is a classic example of where and how equity investors can play a vital role in bringing capital and industry expertise to the table, making vital investment decisions, especially in markets. high growth areas, potentially preserving jobs and creating more high-skilled employment opportunities growing numbers of unemployed graduates, restructuring debt and helping businesses stay afloat during this difficult time.

In 2019, small and medium-sized enterprises (SMEs) accounted for 98.5% of business establishments in Malaysia, 38.9% of GDP contribution, 48.4% of the country’s workforce and 18% of total exports , which suggests that the survival of SMEs is vital for the country. economy.

Numerous stimulus packages demonstrate the government’s continued commitment to accelerate economic recovery

As an industry player, equity investors can play an important role in enabling companies to make forays into new, high-value, technology-driven industries, capitalizing on the long-term perspective of sustaining and reviving the growth of these local businesses.

This, to a certain extent, will be able to restore both the life and the livelihoods of society as a whole.

One of the most pronounced impacts of the pandemic has been the spur of more creativity and innovation that the world has witnessed for decades.

As private equity and private equity firms are no strangers to disruptive innovations that change the status quo, this presents a myriad of investment opportunities, especially in companies with high value products or solutions. added.

Fortunately for VentureTECH, guided by our three main areas of investment – biobased and biotechnology; an emerging technology focused on Industrial Revolution 4.0 (IR4.0) and the convergence of the Internet of Things; and green industries – we are now delving into strategic areas, such as health and food safety, through our approved investment pipeline in a biosimilar joint venture with one of Malaysia’s leading pharmaceutical companies with the aim of tackling the growing chronic diseases in Malaysia, while enabling access to affordable health care and precision farming in the agribusiness sector.

Further, understanding the seriousness for Malaysia to drive localization of global vaccine distribution issues, among others, VentureTECH’s mission is to increase localization of critical products and services, by capacity building in systems and production engineering, and IR4.0 areas in targeted high value-added industries.

As a first step, we hope to support investments in the development of local vaccines and segments of rail systems with higher added value.

On the road to Malaysia’s economic recovery, VentureTECH and other equity investors share the government’s mission to revitalize and empower our local businesses, which is evident through various financial stimulus packages and national plans.

The recovery plan of Prihatin Rakyat, Penjana (Short-term economic recovery plan), Pemerkasa (Strategic program for the empowerment of people and the economy), MyDigital Blueprint, Shared Prosperity Vision 2030, the recent Pemulih (People’s Protection and Economic Recovery Package), the upcoming Malaysian 12th Plan and many others demonstrate the government’s continued commitment to accelerate economic recovery and ensure inclusive growth.

VentureTECH has for the third time implemented recovery measures for MCO that provide for an immediate six-month moratorium for our companies in which we invest, while stepping up our plan to grow and create value for them.

Having invested primarily in Bumiputera companies that are technoLeaders of logistics in their respective sectors, VentureTECH has continuously strived to expand market opportunities for its issuing companies, not only to level the playing field, but to further extend their skills, technological skills and , more importantly, their ability to withstand a difficult and uncertain economic climate.

Going forward, this year, we look to launch our first fund management initiative with our strategic partners and create impactful synergies with reputable, like-minded regional leaders, to the benefit not only of our recipient companies, but from the general public. , thanks to the socio-economic multiplier and the positive benefits that we hope to generate as an impact investor.

For the greater good, we also applaud and would like to further encourage our fellow investment and private equity firms to not only continue to help our local businesses, but to grow with them with determined long term goals, while also operating and realizing their full potential. to rise beyond the pandemic.

Despite the massive cuts in 2020 and our search for the most disruptive innovations, some fundamentals still haven’t changed. Some industry trends may have changed but, in most cases, a strong, well-run business with a tenacious founder and a strong management team is still a valuable investment; and by writing as a patient investor, we should stick around to realize its long term value.

The late “father of value investing,” Benjamin Graham stressed the importance of patience in investing when he said patience and investing are natural partners.

To be patient is to endure short-term hardships for future reward. As Aristotle puts it best, “patience is bitter, but its fruit is sweet”.

  • Dr Norida Abd Rahman is the Managing Director of VentureTECH.

The opinions expressed are those of the author and do not necessarily reflect the position of the owners and the editorial board of the journal.


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