PETALING JAYA: The Covid-19 pandemic has disrupted businesses for the entire 2020, even more so for Malayan United Industries Bhd (MUI), which has been trying to forge a turnaround since 2018.
Being involved primarily in the retail, hospitality and property businesses, it is to no surprise that MUI was adversely affected this year, besides Covid-19’s attempt in thwarting its transformation plans.
Despite it being a victim of this unprecedented circumstance, the group seemed to have found the right formula that will enable it to march forward – digitalisation and investing in startups.
MUI has recently entered into the venture capital space to provide funding for startups as it envisioned to be a “one-stop shop” specialist lender and specialist investor for the new economy and to help catalyse the startup economy in Malaysia.
This is the brainchild of the group’s chairman and chief executive officer Andrew Khoo, who took over the reins from his father Tan Sri Khoo Kay Peng two years ago.
Determined to turn the company around which has been bleeding since 2014, Andrew said the pandemic has shown the need to double down on its transformation plans.
“Things are still in motion and on track in that regard. Moving forward, what I can say is that there will be an even greater emphasis on the digital economy.
“Not just the digitalisation of our existing businesses but one of our top priorities will be to invest into startups that are in the tech and digital ecosystem, ” he told StarBiz.
While it may seem to be an unlikely time to invest in technology start-ups, amidst the height of the pandemic, Andrew said the fact was that the best startups emerged and thrived during a time of crisis.
MUI, through its subsidiary Pan Malaysia Corp Bhd, invested into Singapore-based Genesis Alternative Ventures recently, a private lender to venture and growth stage companies.
It is experienced in providing startups with capital through the use of debt financing, meaning that entrepreneurs who have worked so hard to build their startups will not have to dilute themselves significantly when they are looking to scale.
“We understand the value of dilution and with Genesis, we are able to provide an alternative way for these entrepreneurs to raise capital which will further add value to the startup ecosystem in Malaysia and the region.
“Venture debt is a fairly uncommon way for startups to raise capital in South-East Asia which is what makes Genesis unique.
“By working with them, we are creating a unique partnership that derives experiences from both our respective industries, bringing a fresh perspective to the table, ” Andrew said, adding that MUI’s purpose was to support local entrepreneurs through capital injection and providing them with a platform that provided a full suite of services and support to give them the best chance to succeed.
He said the group saw synergistic value in doing this as it complemented its effort to go digital as part of its transformation journey.
MUI’s investment focus will be on high potential startups, both tech and non-tech, which are related to the group’s core businesses namely financial services, retailing, hotel, property and food. Its first investment was in welovesupermom, the leading online marketplace in Asia for mothers, babies and kids.
“This is a highly strategic investment because with our experience in traditional retail formats and welovesupermom’s experience in the online space, we hope to leverage off each other’s expertise to create an outsized growth trajectory.
“Retail businesses have to face the reality that the post-pandemic landscape will see significant and permanent changes.
“In fact, consumer demands and preferences have already changed due to Covid-19 so companies that can quickly adapt to these evolving trends will be in the best position to succeed, ” Andrew said, adding that MUI viewed the Covid-19 disruption to the global disruption industry as an opportunity to accelerate the digitalisation of its businesses.
Meanwhile, the group is also in the process of undertaking a corporate exercise to make its corporate structure cleaner and easier to understand for all institutional investors.
Ultimately, Andrew said the catalyst would be ignited from the investments MUI made into potential startups.
“From there, it will set off a chain reaction of growth in the digital ecosystem, a market with high growth potential in the years to come. With a shared purpose and clear vision it will become very clear to all investors what the underlying potential of MUI will be.
“As it is, our existing assets are already undervalued due to the historical nature of our accounting treatment, ” he said.