Khazanah Says Will Continue With High Risk Venture Capital Deals

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Under criticism from a parliamentary watchdog, Khazanah Nasional says it holds monthly meetings to review risk management matters and post-mortems of all its investments.
The Public Accounts Committee has recommended that Khazanah Nasional communicate to the public more effectively on its venture capital strategies. (Reuters pic)PETALING JAYA: Khazanah Nasional has expressed its commitment to continue supporting Malaysia’s entrepreneurial and venture capital ecosystem, saying it takes a portfolio approach in managing its investments
Under criticism from a parliamentary watchdog over a failed investment in the FashionValet startup, Khazanah said venture capital investments, though inherently high-risk, were essential to driving innovation, nurturing startups, and ultimately strengthening the country’s long-term competitiveness.
“Given the riskiness of venture capital investments, evaluating the success of a given venture capital investment programme necessitates a portfolio approach,” it said in a statement.
Khazanah, which manages Malaysia’s sovereign wealth fund, said it holds a monthly portfolio management committee meeting to review issues such as risk management, portfolio company updates, and post-mortem reviews of all its investments, on top of regular investment committee meetings.
Yesterday, the Public Accounts Committee called for Khazanah to produce post-mortem reports to its audit committee and board of directors for every divested investment with losses exceeding its initial investment.
The committee also said Khazanah should report on its investment performance, not just its financial performance, in its quarterly reports to the finance ministry.
The committee found that Khazanah’s investment in FashionValet had failed due to the company’s risky omnichannel strategy, the Covid-19 pandemic, and shifts in post-pandemic consumer behaviour.
However, the committee acknowledged that Khazanah’s venture capital investment strategy was appropriate for achieving its objective as a catalyst for the domestic innovation ecosystem. - FMT

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