Ekuinas says FY20 results demonstrate resilience despite volatile environment

TheEdge Thu, Jun 24, 2021 09:25pm - 2 years View Original


KUALA LUMPUR (June 24): Ekuiti Nasional Bhd’s (Ekuinas) said its financial results for the financial year ended Dec 31, 2020 (FY20) demonstrated its resilience in delivering value to its portfolio companies while executing its mandate, despite the volatile economic environment.

It said Ekuinas Direct (Tranche II) Fund recorded a gross portfolio return of RM571.2 million, generating a gross internal rate of return (IRR) of 11.9% per annum (p.a) and a net IRR of 8.2%.

Ekuinas Direct (Tranche III) Fund recorded a gross portfolio loss of RM75.4 million, translating to a negative gross IRR of 3.2% p.a, it said

The performance of Fund III improved 7.6% as compared to 2019, reflecting a stringent and comprehensive value creation plans (VCP) that were put in place for the respective portfolio companies to preserve businesses, restore competitiveness and execute turnarounds in their operational and financial performance, it said in a statement today.

As of FY2020, Ekuinas’ total cumulative investment stood at RM4.4 billion, which comprised investments in 42 companies and consequently generated a total economic deployment of RM5.0 billion, together with private sector partners.

Against the backdrop of a global pandemic and slower economic growth, Ekuinas said its investment activities remained active by committing RM250.2 million to strengthen its portfolio of companies.

“During the year, Ekuinas acquired a majority stake in Medispec (M) Sdn Bhd, a leading distributor and marketer of local pharmaceutical and supplement products, marking Ekuinas’ entry into the healthcare and pharmaceutical space.

“In addition, Ekuinas has committed to support its existing portfolio companies through follow-on investments in Icon Offshore Bhd and Flexi Versa Group,” it noted.

Notwithstanding the movement restrictions imposed, Ekuinas said it had also completed the sale of its home-grown dessert and beverage company, Coolblog Apps Sdn Bhd a divestment which brought a total realisation proceeds, including income from dividends and interests, to RM3.2 billion.

Within the same period, through its direct and outsourced funds, Ekuinas has increased the Bumiputera equity ownership to RM5.6 billion, which translates to 1.4 times the capital invested, as well as increasing the number of Bumiputera managers and employees in its portfolio companies by 13.3% and 10.5% respectively, it said.

Chief executive officer Syed Yasir Arafat Syed Abd Kadir commented that 2020 started off slow with private equity (PE) activities fell off sharply in the first quarter (1Q 2020), as decisions were put on hold due to the restrictions on travel as well as a pullback in sentiment, with confidence taking an abrupt turn for the worst.

“However, the disruption brought about by the pandemic did not last long and the PE industry saw a rapid rebound as reflected in 3Q 2020. Against this backdrop, we calibrated our strategy for 2021 to prepare for future headwinds for our portfolio companies and ourselves,” he shared.

Looking ahead, he said Ekuinas’ key focus for 2021 will be on intensifying deal sourcing and portfolio management, while maintaining the overall corporate strategic direction.

“We have built up a robust deal pipeline comprising quality and diverse potential investments and will continue to nurture deal flows through expanded deal criteria, supplemented by improved research and networking.

“We continuously believe in the importance of delivering financial value on our investments to be able to achieve our social objective in a sustainable manner in our role in promoting equitable and sustainable Bumiputera wealth creation and economic participation,” he added.

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