KUALA LUMPUR: Permodalan Nasional Berhad (PNB) has explained the RM18.7 million loss incurred from its investment in the e-commerce platform FashionValet (FV) Sdn Bhd.
The company clarified that the investment was made using PNB's proprietary fund and not through the unit trust funds under Amanah Saham Nasional Berhad (ASNB) subscribed to by the public.
"We regret the loss incurred, which amounted to RM18.7 million after sale proceeds of RM1.3 million were received. However, this should be viewed in relation to the RM337 billion in investment assets managed by PNB and the RM16.4 billion in investment income generated after accounting for this loss in the 2023 financial year," it said in a statement.
It added that strict limits and guardrails were implemented in managing risks to ensure that investments were not concentrated, and that funding was primarily derived from PNB's proprietary fund to protect its unit holders from potential losses.
In 2018, after a detailed evaluation, the PNB Proprietary Fund participated in FV's Series C fundraising through a Redeemable Convertible Preference Shares (RCPS) investment of US$5 million (RM21.8 million) for a small minority stake, as revenue was estimated to increase by approximately 60 per cent annually over the preceding three years.
However, after the investment was made, the company was impacted by the Covid-19 pandemic, as the lockdowns hindered the operation of its physical stores. This occurred after substantial capital expenditure was invested to outfit these stores, leading to cash flow challenges that also affected FV's online platform business.
"FV required an urgent capital injection, but existing investors, including PNB, were unwilling to inject additional funds due to the associated risks.
"Following an extended fundraising process from 2022 to 2023, a Bumiputera investor emerged, willing to invest new capital into the company but at a considerably lower valuation, given the challenging circumstances and the tough global fundraising environment.
"As part of this process, the Bumiputera investor also extended an offer to purchase the stakes held by existing FV investors. Given PNB's small stake and the substantial provision made for the investment, it was decided to accept the purchase offer to allow FV to move forward," it said.
Yesterday, Communications Minister Fahmi Fadzil urged PNB and Khazanah to explain their RM43.9 million losses after selling their stake in the e-commerce platform FV for RM3.1 million.
Fahmi said that such an explanation should be made as they are dealing with public funds.
He also said that both parties, including FV, should be given some time to prepare a formal response.
On Oct 29, the Finance Ministry in a parliamentary written reply, revealed that PNB and Khazanah lost RM43.9 million from the sale of their minority investments in FV.
In 2018, Khazanah invested RM27 million and PNB RM20 million for minority stakes in FV.
Earlier, fashion entrepreneur Datin Vivy Yusof and her husband Datuk Fadzaruddin Shah Anuar
announced that they will relinquish their positions in FV.
They said the decision was made in light of recent issues surrounding the sale of PNB and Khazanah's stake in the company.
They said this was also done to prevent the ongoing issues from further affecting the company, which is currently in the process of a turnaround.