Malaysian pension fund Kumpulan Wang Persaraan (KWAP) has launched a brand new investment vehicle aimed at boosting both the domestic and regional venture capital (VC) and startup scene.
Dana Perintis which means “Pioneer Fund” has committed to invest up to MYR500 million ($105 million) over the next 18 to 24 months in startups, with the number poised to reach $120-130 million, Hazman Hilmi Sallahuddin, chief investment officer at KWAP, told AsianInvestor.
“We launched Dana Perintis with the aim of playing a role in supporting the enhancement of the local VC ecosystem. Although the allocation is relatively small compared to our other investments, it is still vital for our fund’s long-term growth,” he said.
KWAP’s total assets under management was MYR184.5 billion ($38.5 billion) as of July 2023. A revamp of its strategic asset allocation in November 2022 changed the split of domestic and overseas assets from 80/20 to 70/30.
The outline of Dana Perintis is to focus equally on two strategies. Half of the capital, around MYR250 million, will be directed towards investing in VC funds with exposure focusing on Malaysia. Another MYR250 million will be committed towards direct investments into promising early-stage companies.
“Malaysia’s VC ecosystem is evolving rapidly however, we do foresee the need for some flexibility to look for investments outside of Malaysia, especially within the Southeast Asia region. We are optimistic that this will create opportunities to invest in the best regional companies and potentially bring them to Malaysia,” Sallahuddin said.
He elaborated that Malaysia’s VC scene needs committed capital injection to move out of a somewhat negative, self-enforcing loop, where there is not enough capital coming into the VC environment in Malaysia because there are not enough potential deals in the space.
KWAP is looking to break this vicious cycle with Dana Perintis, while increasing its allocation to private markets.
As part of the strategy revamp in November 2022, the portfolio target balance between public and private assets was changed to 80/20 from previously 90/10.
Although the aim is to boost Malaysia’s VC scene, Dana Perintis will not only invest directly into Malaysia. In order to attract capital and talent to the VC and startup scene, KWAP is looking abroad as well.
As the Malaysian ecosystem is developing and not mature yet, KWAP foresees the Dana Perintis’ need for flexibility to also look outside in the Southeast Asia region especially, Sallahuddin explained. The aim would be for VC investment industry actors active elsewhere in the region, to set up shop in Malaysia as well.
For example, as Singapore is getting increasingly expensive, KWAP has been in discussions with some Singapore-based VC funds for them to set up office in Malaysia because of advantages in terms of available talent and lower costs.
“Kuala Lumpur in particular, is seen as a gateway to the Singapore market. So, we have communicated to VC funds that we are open to invest in them, provided they set up locally with local talents. We believe that this will contribute positively to the overall Malaysian ecosystem as well,” Sallahuddin said.
KWAP’s total assets under management was MYR184.5 billion ($38.5 billion) as of July 2023.