Malaysia Debt Ventures and Kenanga set up $73m fintech fund

KUALA LUMPUR — Malaysia Debt Ventures (MDV), a state-owned financier of technology and green startups in the country, and Kenanga Investment Bank on last Wednesday announced the creation of a fintech fund, with a target size of 300 million ringgit ($73 million).

The new vehicle seeks to support the growth of fintech companies and develop the venture capital industry in Malaysia. The fund will see MDV and Kenanga take up the role of joint managers and co-investors on a pro rata basis, according to a statement.

In the initial investment phase, MDV and Kenanga will each contribute 25 million ringgit as seed capital for the fund. The money will primarily be used to finance fintech companies at various stages of their life cycle, up to the pre-initial public offering.

The collaboration will draw on the strengths of each organization in the areas of equity and debt financing of fintech companies, investment capabilities and access to capital markets to offer more comprehensive financing solutions to fintech companies in Malaysia.

Nizam Mohamed Nadzri, MDV’s CEO, said the fund will focus on fintech companies, as this segment yields great growth potential in addition to being a pillar of the country’s digital economic agenda.

The sector is on the brink of tremendous growth arising from opportunities for “neobanks,” as internet-only banks are called, and fintech companies in core banking systems. The sector will also benefit from the adoption of financial services by platform companies and other technology startups, Nadzri added.

MDV Chairman Khairul Azwan Harun said that as the only financial institution in Malaysia offering venture debt financing as a complementary source of capital for technology startups, MDV is fully committed to continuing to develop the country’s venture debt market.

As a developing nation, Malaysia’s funding ecosystem still favors the conventional financial institutions and capital markets as its main sources of financing, Harun said. But MDV believes the country’s economy will benefit from the development of the venture debt market, as it is a common funding vehicle for tech startups in more developed markets to complement equity funding from venture capitalists.