by NUR HANANI AZMAN / pic by TMR GRAPHIC

EKUITI Nasional Bhd (Ekuinas) recorded a gross portfolio return of RM582.9 million or 13.5% of annualised gross internal rate of return (IRR) under its Ekuinas Direct (Tranche II) Fund for the financial year ended Dec 31, 2019 (FY19).

Its Ekuinas Direct (Tranche III) Fund, however, reported a gross portfolio loss of RM170.5 million, which is equivalent to a negative annualised gross IRR of 10.8%, due to reduced valuations of several portfolio companies, the private-equity (PE) firm noted in a release yesterday.

Ekuinas said it has put in place stringent and comprehensive value-creation initiatives to enhance the competitiveness of the respective companies, as well as executed turnaround plans to improve their operational and financial performance.

The state-owned PE has been selective in deploying its capital and channelling its investment efforts toward follow-on investments.

Ekuinas committed a total of RM205.9 million this year, which comprise RM20 million investment in Orkim Sdn Bhd, RM183 million in Icon Offshore Bhd and RM2.9 million in Exabytes Capital Group Sdn Bhd.

The fund exited two of its portfolio companies, namely APIIT Lanka Pte Ltd and Primabaguz Sdn Bhd, in line with its move to crystallise its investments under the Ekuinas Direct (Tranche II) Fund.

The divestments of APIIT Lanka and Primabaguz generated a gross IRR of 17.7% and 22.1% and money multiple of 2.2 and 3.8 times the capital invested respectively.

The realisation proceeds of Ekuinas’ divestment activities in 2019 stood at RM384.6 million, bringing the company’s total realisation, including income from dividends and interests, to RM3.1 billion.

Ekuinas chairman Raja Tan Sri Arshad Raja Tun Uda said 2019 was a milestone year as the fund commemorated 10 years since its inception.

“Our aim remains to be the partner for growth for Malaysia’s next generation of leading companies, while promoting equitable and sustainable Bumiputera wealth creation and economic participation through the PE model.

“Our commercial and social performances over the decade is a reflection of the effectiveness of our unique PE model strategy in creating value for companies. The returns we generate allow us to execute our social objective through assisting and elevating the Bumiputera community,” he said in a statement.

Ekuinas has increased the overall Bumiputera equity ownership to RM5.4 billion, which is 1.5 times the capital invested. This leads to an increase in total shareholders’ value of RM6.9 billion, which translates to 1.9 times of the capital invested.

Ekuinas also expanded the Bumiputera talent pool in its portfolio companies, with management and employees recording a rise of 23.5% and 14.1% respectively, since the fund’s entry.

“Against that backdrop, our focus in FY19 was to strengthen our portfolio companies through specific value-creation plans (VCPs) that encompassed operational and capacity improvements to increase and optimise the overall performance of the companies.

“This is in addition to creating long-term value, to ensure they are on a stronger footing to scale further and navigate through challenging times.

“We continued to execute against our investment strategy amid the slowdown by implementing our VCPs to further improve and optimise the overall performance of our companies,” Ekuinas CEO Syed Yasir Arafat Syed Abd Kadir said.