PETALING JAYA: Ekuiti Nasional Bhd (Ekuinas), which currently has RM4.1bil in total funds under management, is positioning to secure more deals in various sectors to beef up its top and bottom lines.
Chief executive officer Syed Yasir Arafat Syed Abdul Kadir in an interview with StarBiz said the company was now in a good position to do deals, as it has ample dry powder and a healthy deal pipeline.
He added the private equity (PE) firm was ready to capitalise on opportunities this year that were aligned to its investment strategies.
“We expect this year to be the right time for Ekuinas to convert these opportunities into actual deal transactions,” he noted.
He said Ekuinas had deployed a total of RM4.4bil into 24 companies through its direct investment programme, and another 18 companies via its outsourced fund management programme.
“We are sector-agnostic. Apart from real estate, property and commodities, we are open to invest in any sector in the Malaysian economy.
The company sees significant opportunities in healthcare, consumer, food manufacturing and processing as well as electronics manufacturing services
“Our pipeline has been quite solid in precisely those sectors. We currently have RM4.1bil in total funds under management and will focus on deployment of our Tranche IV Fund,” he added.
The fund was launched in 2019 and has an option to increase to RM1.5bil, which is available for deployment to continue in the acceleration of the growth of local and high-potential businesses.
Following the closure of its maiden fund at the end of 2017, to date, Ekuinas has successfully realised RM2.3bil from its divestment proceeds, dividends and interests which has contributed to the setting up of the new fund (Tranche IV Fund). This brings Ekuinas’ total funds under management to the current RM4.1bil.
Ekuinas is a PE company owned by the government. It was formed in 2009 to promote bumiputra economic participation through the creation of innovative companies and to advance the PE industry in the country.
For the financial year 2021 (FY21), Ekuinas’ portfolio companies recorded a consolidated revenue growth of 12.1% and earnings before interest, tax, depreciation and amortisation (Ebitda) at a solid growth of 28%.
The strong growth was driven by cost containment measures implemented in 2020 and 2021, improved efficiency through people and IT improvements, expansion, re-opening of the economy, growing consumer appetite for healthcare products and a healthier lifestyle.
As for potential divestments, without elaborating further, Syed Yasir said the company had exit plans for a couple of its companies.
“We are working with our advisers and evaluating opportunities available for us to crystallise the value of our investments. Ekuinas will also continue to execute on our value creation plans to further strengthen our portfolio companies,” he said.
“Last year, we established an environmental, social and governance (ESG) framework as a road map for the implementation of ESG initiatives in our business activities and investment strategies.
“We have completed our initial year of implementation for our ESG initiatives in 2022, and look forward to maintaining the momentum for our ESG activities in 2023,” he said.
Commenting on Ekuinas portfolio of companies’ performance, Syed Yasir said overall it was commendable. Among the companies under its stable include Al-Ikhsan Sports Sdn Bhd, Orkim Sdn Bhd, Icon Offshore Bhd
and Medispec Sdn Bhd.
As the largest sports retailer in the country by revenue and by number of outlets, Al-Ikhsan Sports, he said chalked up a sterling performance in FY2022 with a 73% increase in revenue, and a whopping 282% of Ebitda growth compared to 2021.
This was driven by rising consumer interest for healthier lifestyles, especially post-Covid-19. In addition, he said Al-Ikhsan’s efforts at diversifying the company’s product mix have helped to increase the sports retailer’s overall profitability.
Al-Ikhsan caught the attention of Ekuinas in 2010 and resulted in the latter acquiring a 35% stake in 2016, making it a significant shareholder of the company.
As for Orkim, he said it currently commands a strong 40% market share and is currently the biggest player in the Clean Petroleum Product (CCP) logistics market in the country, as well as one of the leading players within South-East Asia.
“Orkim is currently servicing the top oil majors in the country like PETRONAS, Shell, BHP and Petron, and regionally Pertamina and ExxonMobil, among others, with an excellent safety track record.
“The company has a combination of time charter (long-term and short-term) and voyage charter contracts to optimise fleet operations and earnings.
“Ekuinas strengthened the management bench and navigated the company with a focus on securing long term charters, building of new vessels and disposal of older vessels in updating its fleet, optimising technology in processes to enhance productivity,” Syed Yasir noted.
On Icon Offshore, he said Ekuinas led a debt restructuring exercise in 2019 which reduced the group’s gearing ratio to 1.14 times, from 9.16 times.
“We supported Icon in the acquisition of its first jack-up drilling rig for RM177mil in 2020. Last year, we took advantage of an opportunistic deal to divest the asset for RM381.6mil, doubling Icon Offshore’s initial investment in a little less than two years. This enabled the company to pay a healthy dividend to its shareholders.
“Overall, Icon Offshore continues to enjoy strong financial footing, and is well positioned to take advantage of the buoyant oil and gas industry in Malaysia,” he said.
The acquisition of Medispec in Feb 2019 marked Ekuinas’ entry into the pharmaceutical space during the height of the Covid-19 pandemic.
He said the focus would be on invigorating Medispec’s in-house brand, Vitamode. Since Ekuinas entry, Vitamode’s sales has grown at a 22% compounded annual growth rate (CAGR) on the back of strong growth from existing product portfolio and introduction of nine new products. Vitamode is currently sold in Malaysia and Brunei.
“We will also be looking at business expansion through mergers and acquisitions, and partnerships with pharmaceutical players,” he noted.
To a question on whether there are plans to invest overseas, Syed Yasir said: “As a government-linked PE management company, it is our mandate to identify and grow Malaysia’s next generation of leading companies and this reflects our focus on investments in the country.
“Should the government decide to grow our scope to include international investments, we will be more than willing to expand our horizon, whilst keeping to our commitment of value generation for Malaysia,” he said.
