Malaysia's RHL Ventures launches SME fund

It is being called the first public-private partnership since Malaysia began overhauling its venture capital industry under a new political administration last year. AVCJ understands a first close has been reached at MYR50 million. This was provided by SME Corp on a one-to-one matching basis with RHL.

The fund will make sector-agnostic deployments of about $1-5 million with a significant focus on SMEs in non-tech sectors such as healthcare and consumer, including non-restaurant food and beverage. Fundraising to date has focused on the RHL’s existing network of family offices and financial institutions, including investors in Malaysia, Singapore, and Indonesia. 

“The idea is to bring foreign direct investors back to Malaysia,” Rachel Lau, a managing director at RHL, told AVCJ. “We’re extremely bullish about GDP growth and consumption. The population is well educated and GDP per capita is higher than in China. Our airports are at overcapacity because of the tourism levels. In terms of that, it’s been extremely comforting one year after the elections.”

National elections in Malaysia last year saw the removal of a six-decade regime amid a government scandal related to the strategic investment program 1Malaysia Development Berhad, or 1MDB. Although investors have been encouraged by a range of policy reform efforts aimed at shoring up the investment industry, the scandal is believed to have resulted in significant reputational damage.

Lau said that 1MDB fallout has not been a significant factor in fundraising to date but that the process has been slow. She described the local start-up ecosystem as having done a poor job marketing itself internationally in part because some of the most successful entrepreneurs are complacent and uninterested in taking their companies to the next level with cross-border expansions.

“They’re cash-rich and the fire’s not there anymore,” Lau said, noting a promising parallel trend of younger Malaysia entrepreneurs returning home from overseas. “So, we’re looking for the new breed, who just came back. They have exposure to different things and are a bit more hungry. Our job is to help them access markets in different countries.”

RHL was launched in 2016 and initially focused on technology investments across Southeast Asia. It raised about $100 million for this strategy from corporates and family offices in 2017. Investments include e-commerce player Signature Market, employee benefits services technology provider HealthMetrics, interior design platform Mocento, and IT services company Perx.

The SME fund is RHL’s first institutional offering. The fund’s tighter geographic focus on Malaysia and broader sector mandate were instrumental in securing government support. Malaysia’s VC space is considered highly dependent on the state. Last year, the government allocated MYR2 billion to a co-investment scheme that will match commitments from VC funds.

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• Topics
• Southeast Asia
• Consumer
• Healthcare
• Fundraising
• Venture
• Malaysia
• SME