Malaysia’s sovereign wealth fund Khazanah explains why it didn’t invest in Grab

Malaysian sovereign wealth fund Khazanah Nasional has defended its decision not to make an early investment in Southeast Asian ride-hailing and food delivery super app Grab.

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

treasure I could not close a first deal to finance the Malaysian-founded Grab.

Other investors, including Singaporean state investor Temasek, eventually took a stake in Grab and the public transport giant moved its headquarters to Singapore. The company raised $4.5 billion and listed on Nasdaq in late 2021 through a SPAC merger with Altimeter Growth Corp, making Grab the largest US listing by a Southeast Asian company.

Khazanah was criticized for what some have 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 goes public on the Nasdaq in Singapore on Thursday, December 2, 2021.

Ore Huiying | 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 is not really what we do, and it’s not really our experience and skills.”

“So what we’re trying to do is, instead of trying to make these investments directly, we’re actually luring investments into venture capital funds that then invest in companies in the region.”

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

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

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

Khazanah’s investment in foreign-owned Uber instead of Grab, which was started by two Malaysians, raised eyebrows in Malaysia’s investment community.

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Perspectives of venture capital markets

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

But Khazanah would continue to deploy funds in the technology sector and has been doing so for the past 10 years.

“In hindsight, it’s a good thing that we can’t really do direct investments anyway, because that’s something that’s pretty difficult for anyone who’s been in VC,” Zahruddin said.

In hindsight, it’s a good thing we couldn’t do direct investments anyway, because that’s something that’s pretty hard for anyone who’s been in VC.

Azmil Zahruddin

National Treasury

Khazanah reported a nearly 80% drop in annual profit in 2021 to 670 million Malaysian ringgit, or $150.36 million. In the previous year, profits also fell by around 60% to RM2.9 billion.

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

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

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