Malaysia and the rest of ASEAN

It has been just over a year since my last visit, but it seems that a lot has changed. The city seems a bit more vibrant than usual, traffic a bit worse than usual and people are smiling more. Indeed, things are improving. Malaysia's economy has been on the mend since 2009 and is estimated to grow 5% this year.

The private equity business has been reasonably laid back although activity is starting to pick up. Government-linked Ekuinas Nasional Berhad has been catalyzing local private equity deals like its colleagues from MAVCAP and MTDC are doing for the venture capital industry. Ekuinas aims to invest more than RM4.5 billion ($1.49 billion) in qualified companies over the next five years and outsource RM1 billion ($331 million).

In fact, RM400 million ($132.4 million) - more money still available for qualified GPs - has already been outsourced to three fund managers, Navis Capital Partners, CIMB Private Equity and Kuwait Finance House's private equity unit. The managers were also able to raise an additional RM100 million and are now busy scouring the country for deals that fit into Ekuinas' profile.

Leading the group is Navis with its Malaysian Growth Opportunity Fund I (a vehicle under the Outsourced Investment Programme) which injected RM17 million ($5.6 million) in Kinderdijk Group, which sells and distributes highly popular lifestyle and baby-care brands, currently owned by two local entrepreneurs.

Speaking of Navis, I got a chance to catch up with Nick Bloy about the private equity firm he co-founded with Rick Foyston and Rodney Muse. Sitting in the new Navis office, Bloy tells me he expects Navis to invest at a very strong pace with many of the deals continuing in the ASEAN region (they are also discussing deals in Australia, Indonesia and China), where they are very well established.

Bloy sees potential in cross-border growth strategy afforded by the ASEAN Free Trade Agreement. In particular, consumer-related opportunities in Indonesia rank highly on his list. In terms of Malaysia, apart from the above deal, Navis is a midst of due diligence on an estimated RM850 million ($281.4 million) buyout of another rubber glove maker.

With this and the YTY deal, will Malaysia become Asia's next big buyout market? Unlikely. Although good deals will continue to be available there, private equity firms will have to deal with the fact that there is (as one fund manager told me) "a lot of local money that can crowd out private equity."

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• Topics
• Southeast Asia
• Investments
• Nicholas Bloy
• Navis Management