Malaysian sovereign wealth fund Khazanah explains why it did not invest in Grab

Malaysian sovereign wealth fund Khazanah explains why it did not invest in Grab

Malaysia’s sovereign wealth fund Khazanah Nasional defended its decision not to make an upfront investment in the Grab superapp for transportation of goods and food deliveries from Southeast Asia.

Chief Investment Officer Azmil Zahruddin told CNBC that the fund’s investment strategy was to focus on large investments, not direct start deals.

treasure he could not close an early deal to finance Grab, founded in Malaysia.

Other investors, including Singapore state investor Temasek, eventually took a stake in Grab and the racing giant moved its headquarters to Singapore. The company raised $ 4.5 billion and is listed on Nasdaq at the end of 2021 through a SPAC merger with Altimeter Growth Corp, making Grab the largest listing in the United States from a Southeast Asian company.

Khazanah was criticized for what some said was a “missed opportunity” for Malaysia.

Anthony Tan, chief executive of Grab Holdings Inc., center right, and Tan Hooi Ling, co-founder of Grab Holdings Inc., celebrate on stage during a bell ringing ceremony as Grab begins trading on Nasdaq, a Singapore, on Thursday 2 December 2021.

Huiying Hours | Bloomberg | Getty Images

“You have to look at what Khazanah is and what its DNA is,” Zahruddin said in an exclusive interview with “CNBC Squawk Box Asia” on Thursday.

“Our DNA is that we manage large investments. [Venture capital] investing isn’t really what we do, and it’s not really our experience and skill set. “

“So what we’re trying to do is, instead of trying to make those investments directly, we’re actually putting investments in VC funds which then invest in companies in the region.”

Zahruddin agreed, however, that it was important for Malaysia to support its entrepreneurs and retain its talent.

He said Khazanah will continue to help Malaysian startups through an indirect approach of investing in lenders who take a stake in these new companies and potentially invest in them directly after they have matured to a size that meets the fund’s expectations. investment criteria.

To that end, Zahruddin said Khazanah invested in Grab competitor Uber through an intermediary lender who was willing to invest in Uber at an early stage.

Khazanah’s investment in the foreign-owned Uber instead of Grab, initiated by two Malaysians, raised eyebrows in the Malaysian investment community.

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Prospects for the venture capital markets

Zahruddin said the venture capital markets have been quite challenging and many endowment funds that have been active in venture capital have seen their investments drop by as much as 40% over the past year.

But Khazanah would continue to distribute funds in the tech sector and has done so for the past 10 years.

“In hindsight, it’s a good thing we’re not able to make direct investments anyway, because it’s something that’s pretty challenging for anyone who’s been to VC,” Zahruddin said.

In hindsight, it’s a good thing we’re not able to make direct investments anyway, because that’s something that’s pretty challenging for anyone who’s been to VC.

Azmil Zahruddin

National treasure

Khazanah recorded an almost 80% decline in annual profits in 2021 to 670 million Malaysian ringgits, or $ 150.36 million. Profits also dropped by around 60% to RM $ 2.9 billion the year before.

The sovereign wealth fund said the decline in profits was due to its continued extension of financial assistance to its airlines and tourism investments that suffered from Covid-19 disruptions.

Last month, Khazanah announced that he would be exploring new investment opportunities in Turkey following a meeting between the fund representatives and the Turkey Wealth Fund in Istanbul.

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