Malaysia’s sovereign wealth fund Khazanah Nasional has defended its decision not to invest early in Southeast Asia’s ride-hailing and food delivery super app Grab.
Chief investment officer Azmil Zahruddin told CNBC the fund’s investment strategy is to focus on big investments — not outright startup deals.
Treasure could not strike an early deal to fund Malaysia-based Grab.
Other investors, including Singapore’s state-owned investor Temasek, eventually took a stake in Grab, and the ride-hailing giant moved its headquarters to Singapore. The company raised $4.5 billion and was formed through a SPAC merger with Altimeter Growth Corp. in late 2021. is listed on Nasdaq, making Grab the largest listing of a Southeast Asian company in the United States.
Khazanah has been criticized with some saying it is a “missed opportunity” for Malaysia.
Anthony Tan, Chief Executive Officer of Grab Holdings Inc., center right, and Tan Hooi Ling, co-founder of Grab Holdings Inc., celebrate on stage during a bell ringing ceremony as Grab begins trading on the Nasdaq in Singapore Thursday, April 2 December 2021.
Ore Huiying | Bloomberg | Getty Images
“You have to look at what Khazanah is and what his DNA is,” Zahruddin said in an exclusive interview with CNBC Squawk Box Asia on Thursday.
“Our DNA is that we manage large investments. [Venture capital] Investing isn’t really what we do and it’s not really our expertise and skill.”
“So instead of trying to make those investments directly, we’re trying to make investments in VC funds, which then invest in companies in the region.”
However, Zahruddin agreed that it is important for Malaysia to support its entrepreneurs and retain its talent.
He said Khazanah will continue to help Malaysian startups through an indirect approach, investing in backers investing in these new ventures and potentially investing in them directly after they mature to a size that matches that of the fund investment criteria.
To that end, Zahruddin said, Khazanah invested in Grab’s competitor Uber through an intermediary lender that was willing to invest in Uber at an early stage.
Khazanah’s investment in foreign-owned Uber in place of Grab, founded by two Malaysians, caused quite a stir in the Malaysian investment community.
Outlook for venture capital markets
Zahruddin said venture capital markets have been quite challenging and many endowment funds that have been active in venture capital have seen their investments fall by up to 40% over the past year.
But Khazanah would continue to pour funds into the technology sector and has done so for the past 10 years.
“In hindsight, it’s good that we’re not really in a position to do direct investment anyway, because that’s something that’s been quite challenging for anyone who’s been in VC,” Zahruddin said.
Khazanah saw annual profits fall nearly 80% to 670 million Malaysian ringgits, or $150.36 million, in 2021. A year earlier, profits also fell about 60% to RM$2.9 billion.
The sovereign wealth fund said the fall in profit was due to the continued expansion of financial support for its airlines and tourism investments, which are suffering from the disruptions of Covid-19.
Last month, Khazanah announced that it would explore new investment opportunities in Turkey following a meeting between representatives of the fund and the Turkey Wealth Fund in Istanbul.