The Rise of Malaysia’s Private Equity Industry

19 Apr 2022   |  Malaysia

Malaysia’s private equity market has not enjoyed the kind of growth other markets have experienced in the past decade. The country saw a slow increase in the number of registered private equity management corporations, as well as the number of private equity professionals. But in 2021, venture capital and private equity deals in Malaysia reached 36 deals from 26 the previous year, amounting to $1.1 billion.

As the Southeast Asian region transitions to a post-pandemic recovery mode, the Malaysian economy is expected to expand, offering great opportunities for investments in the country. Private equity firms can look to the country’s various thriving industries for all possible investments, securing deals for their firm and its investors.

Which industries are most attractive for capital investments in Malaysia, and how attractive are private equity firms for institutional and retail investors in the country’s post-pandemic economy?

The 12MP and Private Equity

Last year, the government announced the 12th Malaysia Plan (12MP), Malaysia’s development roadmap for 2021 to 2025. This framework includes the country’s post-pandemic recovery and economic prosperity plan. Among the top priorities include renewable energy sources, transportation sector expansion, and adoption of technology and automation for businesses, among others.

The Malaysian government acknowledged the lack of high-quality private investments in the country. Now, more industries that are part of Industry 4.0 are being included in the country’s economic development plans. This is to make sure that the country remains attractive to private investors. The prospects for private equity firms in Malaysia looking to invest in priority sectors remain bright.

Malaysia is also strengthening its research and development capabilities toward commercialization, and digitalization is at the forefront of this plan. Private equity investors looking for startups and tech businesses will find plenty of opportunities for growth in the country.

Small and medium-sized enterprises (SMEs) will also benefit greatly from the capital that private equity firms can inject into their businesses. The government is keen on transforming this sector as part of the 12MP. Capital investments made to these Malaysian SMEs will prove to be beneficial for private equity firms and entrepreneurs.

Prospects for Retail Investors

Retail Investors

Interested institutional and retail investors who want to learn how to invest in private equity in Malaysia will find that the upward trajectory of private investments in the country will be worth the high risk. The country is pushing for digitalization and the transformation of high-impact industries. These sectors will yield high returns for those who plan to invest.

As the Malaysian government also plans to improve public services, it can be expected that growth will spread throughout all the country’s states. Pushing for prosperity across all regions is an approach that will be rewarding for private equity investors in Malaysia, where much-needed reform is expected.

The worst of the pandemic is over for Malaysia. The country can now look forward to working for true economic development as the work for 12MP progresses. Private equity investments will become more attractive in the coming years, well beyond the 2025 target for Malaysia.

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