KUALA LUMPUR: Sovereign wealth fund Khazanah Nasional Berhad will continue to invest in startups following controversy over its FashionValet (FV) investment.
Finance Minister II Datuk Seri Amir Hamzah Azizan said Khazanah has revamped its decision-making and selection processes since it invested in FV seven years ago.
"The FV issue does not affect Khazanah's commitment to investing in startups, as venture capital (VC) is part of its mandate," he told the Dewan Rakyat.
"It (Khazanah) will continue supporting the startup ecosystem while strengthening oversight."
He said Khazanah has a dedicated fund to invest in startups to boost competitiveness and national resilience.
Amir said VC was important in supporting Malaysia's economic growth by creating jobs and new business opportunities.
He cited Khazanah's investment in the local dairy business, Farm Fresh Berhad, as part of its VC investments.
The company has delivered returns over 13 times Khazanah's initial investment, exceeding RM800 million in value, he said."
Amir was responding to a question from Syerleena Abdul Rashid (PH-Bukit Bendera) who asked if Khazanah would continue investing in startups after the FV issue.
On FV, Amir said Khazanah and Permodalan Nasional Berhad's (PNB) investments in the company were subject to detailed evaluations and due diligence.
He said FV posted positive cash returns for several years after receiving investments from Khazanah and PNB but was impacted by Covid-19, funding issues and changing e-commerce trends.
"These issues created cash flow constraints for FV, which sought new funding, but existing shareholders, including Khazanah and PNB, did not opt to take on additional risk.
"The tough fundraising climate also meant that FV's efforts to secure new investors were unsuccessful."
He said even though Khazanah and PNB were minority investors, they played an active role in assisting FV though the challenges the company faced were "too great".
It was previously reported that Khazanah and PNB lost RM43.9 million from the sale of their minority investments in FV.