KUALA LUMPUR — Sovereign wealth fund Khazanah Nasional Bhd’s approach in deciding investments has been revamped since it invested RM27 million into e-commerce platform FashionValet Sdn Bhd seven years ago, said Finance Minister II Datuk Seri Amir Hamzah Azizan.
Speaking in the Dewan Rakyat today, Amir said the government-linked investment company (GLIC) had also tightened its investment selection processes, including those involving start-up companies and venture capital.
Stressing that Khazanah’s failed investment in FashionValet does not affect the GLIC’s ongoing mission to invest in startups, Amir said providing venture capital funding remains part of Khazanah’s mandate as it continues efforts to support startup ecosystems while improving control mechanisms.
Amir today did not mention whether investment fund manager Permodalan Nasional Bhd (PNB), which had also invested RM20 million in FashionValet in 2018, had similarly revamped its investment-making processes.
But he defended the GLICs move to back the FashionValet at then time.
He said this was because FashionValet appeared to have a solid growth trajectory when it was evaluated by Khazanah and PNB in 2017. At the time, the platform had more than 400 brands and 15,000 products under it.
Reiterating that the e-commerce segment was considered a high-potential space which had previously seen profitable returns, he added that FashionValet’s business garnered nearly RM60 million in 2017, while it recorded an over 100% annual growth rate from 2013.
“Khazanah and PNB’s investments into FashionValet was made after a detailed selection process and due diligence had been carried out by the respective (GLICs),” Amir said in response to questions from DAP MP Syerleena Abdul Rashid (Bukit Bendera-PH).
“(The investment values) were set at market value reflecting FashionValet’s strong growth trajectory at that time.”
He added that although FashionValet had recorded positive earnings before interest, taxes, depreciation and amortization (EBITDA) for “several years” after Khazanah and PNB’s investments, its business suffered due to the Covid-19 pandemic, causing it to struggle in collecting funds, and from competition from other brands.
The Finance Ministry previously said that Khazanah and PNB had sold their combined RM47 million stake in Fashion Valet at the end of last year for a mere RM3.1 million.
Scoop previously reported that FashionValet had consistently recorded losses over a period of six years, with financial statements for 2017 to 2022 showing that the company had suffered a total loss of RM103.3 million.
In 2018, the year Khazanah and PNB invested a combined total of RM47 million into the platform, FashionValet recorded losses of RM20.18 million in losses after tax – a RM9.4 million increase from the previous year.
Its 2022 annual report had also stated that the company’s current liabilities exceeded current assets by RM8.4 million.
In a supplementary question today, PAS information chief Ahmad Fadhli Shaari (Pasir Mas-PN) asked Amir on FashionValet’s purchase of 30 Maple Sdn Bhd – a company fully owned by FashionValet founders Datin Vivy Yusof and her husband Datuk Fadzarudin Shah Anuar – after receiving Khazanah’s and PNB’s investments.
Fadhli said Khazanah should have been monitoring such transactions since it was already a minority shareholder in FashionValet at the time, and asked if there were measures taken to monitor FashionValet’s financial state after it received state-linked investments.
Amir, however, did not specifically address Fadhli’s questions, instead saying that Khazanah and PNB considers a company’s projected outlook prior to making investment decisions while reiterating his argument on how FahionValet’s business growth was negatively impacted by the worldwide pandemic.
Scoop previously reported that in December 2018, FashionValet purchased 30 Maple Sdn Bhd for a whopping RM95 million. It is understood that 30 Maple operates Vivy’s well-known headscarf brand Duck.
30 Maple, however, did appear to be a profitable company in 2017 and 2018, recording a profit of RM8.5 million and RM7.745 million respectively.
The company documents sighted by Scoop also made no mention of the Covid-19 pandemic affecting cash flow during FashionValet’s attempts to grow the company’s platform.
However, mention was made of the rising costs of operating Duck due to the pandemic.
Vivy and Fadzaruddin are currently being questioned by the Malaysian Anti-Corruption Commission (MACC) as part of the anti-graft agency’s investigation into how FashionValet had utilised Khazanah and PNB’s investments.
MACC previously searched FashionValet’s office as well as Vivy and Fadzaruddin’s house, seizing 11 handbags and a luxury watch with a total worth of about RM200,000.
The commission has also frozen several of the duo’s accounts with RM1.1 million in funds. – November 14, 2024