Dana Penjana Nasional ("DPN") Overview
Dana Penjana Nasional aims to enable economic recovery and enhance the growth of the nation’s post-Covid-19 pandemic by spurring the private capital market. In the medium- to long-term, this initiative is expected to catalyse our private capital market by championing the growth of local private capital players. A vibrant private capital market will benefit a start-up ecosystem.
Dana Penjana Nasional initiative aims to benefit:
- Malaysian businesses
During the onset of the Covid-19 pandemic, many businesses face significant challenges, especially in terms of access to funding. As such, to plug the funding gap and enable the Government’s economic recovery agenda, the Dana Penjana funds will be invested into innovative early-stage Malaysian businesses. This will help to increase employment, reduce the likelihood of failure, as well as accelerate the growth and expansion of portfolio companies into regional markets.
- Malaysian private capital industry
The Government’s participation brings in much-needed confidence in our nascent private capital industry, which incentivise and attract foreign private investment into the country. The initiative will also build up a pipeline of early-stage companies for later-stage investors, including private equity funds and corporate investors, while strengthening the base of Malaysian venture capital firms.
The private funding market is still a growing industry in Malaysia. However, since the Covid-19 pandemic, Malaysian companies in this industry have been facing funding challenges. By providing a proper ecosystem for foreign participation, Malaysian early-stage companies with potential will be able to reap the benefits on two fronts:
- Talent development
As part of Dana Penjana Nasional requirements, each foreign venture capital company is required to select a local partner to work together in managing the fund and subsequently devise a formal knowledge transfer programme. This is to ensure that our talent in the local venture capital industry is being supported and developed through the foreign-local partnership.
- Scale and network
The success of early-stage companies hinges greatly on the company’s ability to scale and expand regionally out of Malaysia. With a larger network of stakeholders and funds, collaboration with international partners will enable smoother expansion and unlock new synergies regionally or globally for the investee companies.
The funds will be managed by a partnership between the foreign venture capital and a corresponding local partner of their choosing, or vice versa. The foreign partner must display an excellent track record in the applied category of venture investments and commit to implementing a structured and extensive knowledge-sharing programme with the local partner.
More information can be obtained from https://www.penjanakapital.com.my/
Local applicants are not required to have a foreign partner, as long as they have demonstrated a good track record and other relevant experiences. Foreign applicants, on the other hand, are required to partner with a local firm.
One of the key objectives of Dana Penjana is to develop the local venture capital funds and expertise. Successful applicants are required to propose and implement a structured knowledge transfer programme within a year from the inception of the fund and demonstrate results from this knowledge transfer programme at the end of each year.
The training programme should groom the local partners to have capabilities to run their funds successfully in Malaysia and ASEAN in the future. Malaysians should also be included as key management personnel.
The talent/knowledge transfer program may also cover the investee companies where guidance/training/collaboration initiatives may be initiated to allow companies to develop quickly, leveraging on the foreign partners’ extensive network and expertise.
Penjana Kapital will be operating a Fund of Funds (FoF) model, which means Penjana Kapital will not be involved in the day-to-day management of the funds. However, to ensure that the funds remain aligned to Dana Penjana’s objectives, a representative from Penjana Kapital will sit in each fund’s Investment Committee (IC). In addition, Penjana Kapital will assist the General Partners (GPs) to create value for the funds’ investment.
Under the current initiative, Dana Penjana will be allocating the RM1.2 billion fund (RM600.0 million from private investors matched by RM600.0 million from the Government across any one of the following venture capital life cycle:
This fund is specifically dedicated as a startup launchpad by co-creating companies or providing seed capital to early-stage companies. Indicative ticket sizes ranging from up to RM5.0 million.
- Series A/B
Invest in post-revenue companies that have passed the ideation stage. Scaling upstage for a company. Indicative ticket sizes range up to RM20.0 million.
- Growth Stage
It is the phase after Series A/B. Expansion stage for a company. Indicative ticket sizes up to RM20.0 million.
- Venture Debt
Specifically, dedicated funds provide short/mid-term debt financing for companies. Provides funding for businesses not traditionally covered by the banks. Indicative ticket sizes ranging from RM1.0 million to RM10.0 million.
The respective fund size was decided by the Penjana Kapital’s Investment Panel, subject to the approval by its Board of Directors.
To ensure that Malaysian businesses will be the ultimate beneficiary of the initiative, all Dana Penjana funds are required to invest a substantive portion of the fund’s committed capital into Malaysian-owned and Malaysian-based businesses.
As a start, Dana Penjana pilot funds will be sector-agnostic, and the funds’ General Partners will be given the flexibility to pursue their desired strategies into sectors of their choosing. Generally, preference will be given towards investments into companies that are technology-enabled and deploy innovative solutions in their operations, such as those in the Agritech, E-commerce and FinTech industries.
While the overall fund will be sector-agnostic, it will nevertheless follow ethical guidelines which prohibit investments in certain sectors such as alcohol, tobacco, and gambling.
The commercial terms of the funds under Dana Penjana Nasional will be built upon a set of reference points provided by the Ministry of Finance, which are based on global benchmarks. For instance, every fund will be subject to a hurdle rate to earn the carry on the final return. The maximum deal size for any investee company will also be capped to mitigate concentration risk. Nevertheless, the final commercial terms will be decided by Penjana Kapital’s Investment Panel, following negotiations with the respective venture capital firms involved, subject to the approval of Penjana Kapital’s Board of Directors.
Yes, subject to the Investment Panel’s recommendation and approval of the Board of Directors.
The funding period for every fund under Dana Penjana will be between 7 – 10 years.
Exits at the end of the fund life or earlier are expected to be through either public market offerings or trade sales to other venture funds. Ideally, the capital is returned to the Government with an adequate level of returns.
The fund invested by the venture capital firms must, at least, match the commitment by Penjana Kapital.
Funds from the Government will be disbursed through Penjana Kapital to match the venture capitals’ funds once they have been successfully raised and disbursed from the respective funds’ Limited Partners (LPs).
Operating the fund of funds (FoF) model, the underlying funds will take ownership of the investee companies on behalf of Dana Penjana. Penjana Kapital will not take ownership of any intellectual property.
Under Dana Penjana initiative, the foreign venture capital firms and the corresponding local venture capital partner of their choosing will set up a general partnership (GP) to manage the fund, which will be domiciled in Malaysia (set up as either Malaysia Sdn. Bhd. or Labuan company). The GP will be comprised of investment team representatives from both parties.
Matching funds provided by Penjana Kapital will be disbursed to the GPs only once private investor disbursement has been made. Upon disbursement to the GP, Penjana Kapital management will closely monitor the performance of the fund.
|Venture Capital Fund Managers
|Immersion Ventures Inc (IMO Ventures)
Tenggara Capital Sdn Bhd
|The Hive Southeast Asia
Tuas Capital Partners Sdn Bhd
|firstname.lastname@example.org or email@example.com
|Series A & B
|KB Investment Co., Ltd
RHL Ventures Sdn Bhd
|AC Ventures / Translink Capital LLC
Vertex Force Sdn Bhd
|Emissary Capital Sdn Bhd
SB Kaikaku Fund
|CMIA Capital Partners
Bintang Capital Partners Bhd
|Crewstone International Sdn Bhd
(in collaboration with Bradbury Group, BFG)
|Hanwha Asset Management Co., Ltd
Iris Capital Partners Sdn Bhd
*Italic denotes chosen partner