THE government aims to attract global and regio-nal private equity firms to make Malaysia their regional hubs in a move to accelerate the development of the industry here.
Minister in the Prime Minister’s Department Datuk Seri Abdul Wahid Omar said private equity investment has immense potential in cata-lysing economic growth.
He said despite the industry being relatively young, it can encourage growth in private equity investments as a key in achieving Malaysia’s aspiration to become a developed nation by 2020.
“The government is interes-ted in how we can persuade global and regional equity firms to make Malaysia the preferred hub for their regional operations.
“Malaysia has offered a lot in terms of attractive cost of operations, offshore capital markets in Labuan and equally efficient transport connections to all regional cities,” he said at the Malaysian Private Equity Forum, here, yesterday.
In the past, Malaysian businesses and entrepreneurs, who are looking to expand, have favoured debt and initial public offerings as a means of funding their expansion and to crystallise value.
Private equity was seen as more of a last provider of capital, eschewed due to the valuable equity stake that had to be foregone and the irritant nature of having an external investor meddling in the business.
“However, times have significantly changed, having experienced the danger of over gearing during the financial crisis, and an increasing lack of value and liquidity ascribed by market to the listing of smaller mid-sized companies.
“There is an increasing
number of companies that have accepted private equity firms
as partners, who are not only able to provide the capital for expansion, but also share
business, financial know-how and improved governance, which can help navigate their business into the next phase of growth,” Abdul Wahid said.
He said Malaysia’s private investment, which has gained momentum over the years, stood at RM160 billion, or 60.5 per cent, of the total investment in the country last year. In the first half of the year, private investment amounted to RM97.5 billion, which accounts for 69 per cent of the country’s total investment for the period.
“One of the ways to spur private investment is to make sure that businesses will have adequate access to capital,” Abdul Wahid said.