DTA Capital Partners Sdn. Bhd. (DTA) was founded in 1996. In the early days, it specialized in advising, structuring and procuring equity or equity-linked finance schemes for Malaysian-based companies. In November 2001, the company, through its subsidiary, DTA Ventures Management Sdn Bhd (DTAV), secured an Information & Communication Technology Fund (ICT Fund) worth MYR25 million from Malaysia Venture Capital Management Bhd (also known as ‘mavcap’). Since then, the Group has taken a strategic position to focus on venture capital after recognizing the gap in funding younger companies in Malaysia. The Group now consists of the holding company, DTA, and the wholly owned subsidiary DTAV.
[Note: mavcap is the technology venture capital arm set up by the Ministry of Finance of Malaysia to manage a fund of MYR500 million. The effort is to promote technology business in the country.]
DTA is presently raising a new MYR100m venture fund targeting the ICT & the Services Sector (the Fund). So far, a commitment of RM32m has been secured from three parties.
The new fund will focus on
later stage ICT companies
the services sector
the energy-related sector
In the ICT sector, investments are expected to be made in companies operating in the enabler space. This means that their products and services are the engines for the development and commercialization of new and novel:
support & infrastructures
Our present ICT Fund portfolio already consists of young companies operating in BPO, mobile messaging, e-learning, operating systems, hardware & software transmission equipment, wireless security, etc.
The remaining part of the Fund will be for the purchase of pre-IPO and restricted placements of quoted shares, and new issues of private shares in the energy-related and services sector: education, food, healthcare, environment, energy related, etc.
The energy sector is identified as one of the core sectors of the economy ear-marked for development to reduce dependency on the non-renewable fossil fuels. The Services Sector, on the other hand, worth some MYR150bn yearly is chosen as an increasingly higher value-add sector to the Malaysian and the regional economies.
The selection criteria for our funds with respect to the target investments will be as follow:
Management capability and integrity
Proven market and concept (or technology) with a strong market position or competitive advantage
Ownership of significant intellectual properties of commercial interests
Good growth prospects or scalability
Existence of an identifiable divestment strategy
Investment will generally take the form of equity participation in prospective companies and businesses. Investments may also take the form of convertible securities and options as an integral part of an investment structure. Short-term advances may also be granted on exceptional basis.
Maximum investment size per company for the Fund is MYR3.0 million. While the size is not huge, co-investors could be sought. The types of instruments proposed could be Common Shares, Convertible Preference and Convertible Loans. The ICT Fund is fully invested as at to-date.
Ideally and under normal circumstances, the Fund shall not hold more than 49% in each of the investee companies. Exceptions are allowed subject to internal approvals.
Lastly, holding period for each investment is limited to a maximum of 5 years.
The mission of the Fund Company is to identify, invest and nurture Malaysian (and a limited number of foreign) businesses operating in the technology space mentioned before, so that they will contribute to the overall economic growth of the country.
At least 30% of the fund will be utilized to finance start-up investments while the balance will be allocated to emerging companies that are at least some initial track records in commercialization.
Investment focus is on the enabler space in the ICT, services and energy-related sectors, with emphasis on companies in the expansion stage.
DTAV will assume the role of an active investor on behalf of the Fund Company. Although DTAV is NOT likely to be involved with the day-to-day running of the business, it will be keeping close touch with the broad directions of the investee companies. In this respect, we wish to be intimately involved.
The following are some of the areas in which DTAV may be of assistance:
Financial planning and advisory
Arrangement of technology alliance or transfer
Project bids and tenders
The partners’ past successes reflect well on our ability to add value to our investments.
The partners have invested more than MYR16 million in the following technology sectors for the present Fund:
Commerce service providers
Business process outsource
Wireless security and anti-jamming systems
Wireless sensor network
Multimedia, entertainment and advertisement
Clinical software system
Hardware transmission equipment
Open source operating system