Malaysia to see increased mid-market competition

“We expect competition to get more intense as more money enters the fray and chases a limited number of viable deals,” Syed Yasir Arafat Syed Abd Kadir, CEO of Ekuinas, told AVCJ. “The differentiating factor in a GP is the value it brings to a company – from an experience and network perspective as well as the ability to bring the company to its next level of growth and development.”

Syed Abd Kadir added that the decisions made by founder-owned and run companies will tend to veer towards the most suitable partner, rather than the total investment value alone. “Competition for high-quality companies is always tough and it can come from within or outside the industry,” he said. 

One of the more significant developments in Malaysia’s mid-market private equity space has been an escalation of activity from the local banking sector, with players including CIMB, Maybank, and RHB Bank ramping up a number of PE programs in recent years. This trend was extended last month with the launch of Bintang Capital Partners by Affin Hwang Asset Management, a subsidiary of Affin Bank.

Soon Poh Lean, Bintang’s founding partner, said, however, that mid-market competition in the country is still moderate among both local and regional PE investors. This is attributed in part to an opening created by maturing local fund managers that are now gravitating toward larger deals.

“The government-backed PE funds are largely focused on domestic deal flow,” Soon said. “Other previously mid-sized focused PE houses who have at least a one-fund track record have gone on to raise sizeable funds, and as such their deal tickets have notched significantly upwards.”

Private equity activity in Malaysia is expected to benefit from policy reform efforts in the wake of a government scandal related to the strategic investment program 1Malaysia Development Berhad, or 1MDB. Recent PE activity in the country includes COPE Private Equity exiting Serba Dinamik and CVC Capital Partners acquiring Munchy Food Industries.

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• Topics
• Southeast Asia
• GPs
• Malaysia
• M&A
• Growth capital
• Ekuinas