PEI Awards 2018 - Top 3 Exit of the year in Asia

On 11 December 2018, Private Equity International, a global private equity publication with offices in London, Hong Kong and New York shortlisted COPE Private Equity’s exit from Serba Dinamik as Exit of the Year under the Asia-Pacific category.

COPE made its investment in Serba Dinamik in June 2013 and fully divested its stake in January 2018. Over the period of COPE’s investment, Serba Dinamik grew its revenue 4.9-fold and net profits 5.3-fold.As at 31 December 2018, the market capitalisation of Serba Dinamik was RM5.5 bn.

The award is voted by industry peers and the winners were announced on 1 March 2019, with COPE winning third position alongside industry behemoths Barings Private Equity Asia (AuM: USD11.0 bn) and Partners Group (AuM: USD75.0 bn).

PEI Awards 2018 - Top 3 Exit of the year in Asia

COPE Private Equity invests in Kinos Food Industries

COPE Private Equity invests in Kinos Food IndustriesCOPE Private Equity and Kinos Food Industries (M) Sdn Bhd (“Kinos”) announced the completion of a MYR15.0 million investment into Kinos.

Kinos is an established company in snack confectionery and distribution with 35 years of history. The company owns an assortment of iconic household names such as Kinos, Nini, Tora, Ding Dang, Hiro and Mizu whichare popular among children of successive generations. In recent years, the company expanded into potato chips manufacturing to grow a larger segment of export markets.

From its production plant in Pasir Gudang, Johor, Kinos distributes its products to 25 countries around the world, with 45% of sales generated outside Malaysia.

Dato’Sri Liew Yew Chung,CEO of Kinos Food Industries, said: “We are delighted with the confidence COPE Private Equity has in our vision to grow the brand and business, creating many happy memories for children and adults alike by producing the highest quality snacks.”

Dato’ Azam Azman, Managing Partner of COPE Private Equity, said:“Kinos manufactures many of our favourite childhood snacks. We are excited to partner with Dato’ Sri Liew and look forward to supporting Kinos’ regional growth in the years to come.”

COPE Private Equity made the investment from COPE Opportunities IV Sdn Bhd.

COPE Private Equity wins 4 awards at the MVCA Dinner & Awards Night 2018

2017 proved to be a fruitful year for COPE Private Equity Sdn Bhd (“COPE”) and its portfolio companies.

During the MVCA Dinner & Awards Night 2018, which was held on 31 July 2018 by the Malaysian Venture Capital Association (MVCA), both STX Precision Corporation Sdn Bhd and Serba Dinamik Holdings Berhad won Outstanding Investee Company of the year awards, with a 3-year Profit After Tax CAGR of 42.8% and 40.2% respectively. Both companies demonstrated tremendous growth numbers thanks to good management practices and higher export or foreign based revenue contribution.

COPE also won the award for Best Exit in 2017 for Serba Dinamik Holdings Berhad, with IRR of 79.2% and money multiple of 8.9x. For COPE Opportunities IV Sdn Bhd, COPE won the Best Funds Raised in 2017 award. COPE is grateful for the industry recognition given by MVCA.

For the rest of 2018, COPE will be actively looking for ambitious and fast growing companies to partner with and value add. Several promising companies have been identified and are under evaluation. COPE is also preparing some of its investee companies for potential exits.

COPE organises ‘fruitful’ donation drive for IJN Foundation

Premium fruits by MBG for sampling and purchase by guests Premium fruits by MBG for sampling and purchase by guests

On 23 April 2018, COPE Private Equity Sdn Bhd (Formerly known as CMS Opus Private Equity Sdn Bhd) organised a Durian & Fruits Party in Kuala Lumpur for the benefit of the IJN Foundation. The foundation was established in 1995 with the sole mission to raise philanthropic support for the work carried out at the Institut Jantung Negara.

The event was held at the Headquarter of MBG Fruits Sdn Bhd, the largest convenient fruit stores retailer in Malaysia (and a portfolio company of COPE). Guests to the party were invited to partake in the sumptuous durians, as well as to sample and purchase premium imported fruits marketed by MBG. Mr Adnan Lee, founder and CEO of MBG, was present to share his deep knowledge and experience in the fruits business with attendees.

By the end of the fruitful day, thanks to the generous donation from guests and staff, COPE managed to raise RM7,440 for the IJN Foundation.

Representatives from the IJN Foundation, Ms NorAini and Ms Rittzawati Representatives from the IJN Foundation, Ms NorAini and Ms Rittzawati

Industry: Good PE investment prospects on the horizon
By Oliver Christopher Gomez, The Edge Malaysia

Bank Negara Malaysia raised the overnight policy rate (OPR) to 3.25% last month, resulting in higher bank lending rates. This may be good news for local private equity (PE) players as business owners and entrepreneurs may turn to alternative sources of funding.

COPE Private Equity managing director Datuk Azam Azman, for one, thinks good investment prospects are bound to show up in the local market, and that businesses that cater for the mass market will be attractive prospects for PE investments. “Sectors that fulfil large consumer needs such as energy, healthcare, education, food production and peripheries, like medical devices and engineering maintenance services, will continue to dominate growth,” he says.

He adds that key to these companies’ success will be ensuring consistent revenue growth while managing efficient cost management protocols.

Nonetheless, Azam believes that potential portfolio companies in the consumer sector will face increased pressure to maintain brand loyalty as consumers now have access to a wider variety of options, thanks to disruptive technologies. “We cannot ignore the threat and need to embrace these [disruptive technologies] in our investment portfolios,” he says.

Meanwhile, industries that are overly reliant on old technology and labour-intensive production as well as those that suffer from cyclical business headwinds, such as property development and building materials, are to be avoided, says Azam. “We do not invest in property and construction-related companies as this is a capital-intensive sector with long gestation periods and relatively thin profit margins.

“Commodity companies, on the other hand, are inherently dependant on exogenous factors such as global economic cycles, over which our team has little control. Where possible, we would like to be in control of our own destiny.

“As for start-ups, they are essentially experiments on new business models. Thus, these high-risk investments should be left to those with specialised knowledge such as venture capital firms.”

Azam says COPE prefers companies in the food and beverage (F&B), education, healthcare and energy sectors. “We typically look at those with normalised profit after tax of more than RM10 million.”

The firm’s recent investments include a 2016 entry into MBG Fruits, one of the country’s largest fruit retailers, which has a significant presence in shopping malls, public transport hubs and hospitals. Last year, the firm invested in My-Sutera Holdings Sdn Bhd, a uniform manufacturer, distributor and owner of the “Canggih” brand of school uniforms.

COPE’s investing approach has worked out well so far. “As at the fourth quarter of last year, the COPE-KPF Opportunities 1 — our 2006 evergreen fund — achieved an internal rate of return (IRR) of 13.9%, with a realised money multiple of 1.7. COPE Opportunities 2 — a 2012 fund — achieved an IRR of 52.4%, with a realised money multiple of 3.5. Both funds have more than returned the initial funding commitment as well as preferred returns to investors,” says Azam.

Last month, the firm made a successful exit from Serba Dinamik Holdings Bhd after a four-year investment period with the integrated and specialised engineering services company. It had invested RM35 million in a subsidiary of the company in June 2013 via its two funds.

After helping the subsidiary internationalise its operations, Serba was able to grow its revenue by 4.9 times and net profit by 5.3 times. As at September last year, Serba’s revenue and profit after tax stood at RM1.9 billion and RM227 million respectively.

A whopping 71% of Serba’s revenue came from its international operations, up from 45% in 2013. At the point of exit, COPE had generated an IRR of 79.2% and a money multiple of 8.9 on the capital invested.

Although business is on the rise at COPE, senior vice-president of investments Badrul Hisham Jaafar admits that the PE sector is not without its own challenges. “One of the trends we have noticed is large institutional investors consolidating PE investment mandates into a few mega funds, with fund sizes exceeding US$1 billion to US$2 billion. At the end of the day, it takes a lot of resources for institutional investors to select, approve and monitor investments in PE funds, so we understand the move,” he says.

“As a relatively small and homegrown PE firm, COPE has no choice but to grow in size and geographical reach if we are to thrive in the long term. To this end, we have invested in proprietary IT systems over the last few years as well as gained access to private company databases with the help of one of our institutional investors — Ekuiti Nasional Bhd (Ekuinas). We have also worked with external consultants to benchmark our team against global standards.”

Azam says the firm is also considering the possibility of setting up an office abroad, although he admits that the move is still some way off in the future.

Exiting investments

According to Azam, COPE’s expertise lies in helping portfolio companies “institutionalise”. This is done by implementing top-notch corporate governance procedures, investing in IT systems, securing intellectual property (IP) rights for portfolio company prototypes and technologies, implementing operational key performance indicators (KPIs) and developing incentive schemes for second liners in the portfolio companies.

“As a local PE firm, we are heavily invested in the domestic economy. However, if economic growth barely ticks above 5%, how are we supposed to make returns for our investors?

“So, we look at the revenue sources of our portfolio companies: how much comes from home and how much is derived from overseas markets? Looking at the current economic environment, for example, we discuss with the business owners then chart a road map to increase revenue from their overseas markets.”

Once COPE and its portfolio company have agreed to the overarching business objective, the team looks at the company’s fundamentals. “We go through its balance sheets, financial statements and may, for instance, discover that most of its revenue comes from just one source — ad hoc engineering projects. This will be a problem for us as the company does not have any other revenue streams to fall back on. Then, we would consider new business streams that it can capitalise on without straying too far from its core competencies,” says Badrul.

With all the money, time and effort poured into supercharging the portfolio companies, Azam naturally has high expectations. According to him, the firm expects a standard return of 20% over a three to five-year period. “But really, if we can, we want to double our investment by the end of the timeline,” he says.  

Revamping the portfolio company’s business objectives and processes is just one part of the equation, however. COPE also makes it a point to institute employee share option schemes at its portfolio companies. This way, if a portfolio company is listed, deserving staffers are suitably incentivised to ensure the company’s continued success.

But bringing the best business sense and strategic know-how counts for very little if the founders are not willing to commit to what is often a very radical change. “Having a PE firm investing in your business is like getting into a marriage. Having the right chemistry is important as we are then able to minimise ‘marriage issues’ between us and the founders,” says Azam.

He adds that portfolio company founders need to be leaders or “near leaders” in their respective fields. They must also display a range of technical competencies.

“The founders need to have a strong grasp of the technology, distribution channels and branding. Also, they need to have that relentlessness that often characterise the best entrepreneurs of the day,” says Azam.

“We want people who are capable, credible and open to new ideas.”

Although COPE is a relatively new entity, the firm traces its roots back to 2005, when it was established as CMS Opus Private Equity. It changed its name last month to be more in line with the names of its various funds, as well as to distinguish itself from its sister company, Opus Asset Management, which specialises in fixed-income investments.

COPE is one of the few shariah-compliant private equity fund managers in the region.

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Malaysia’s COPE nears target for fourth fund
By Carmela Mendoza, Private Equity International

COPE Private Equity, a Malaysia-focused private equity firm, has raised MYR 275 million ($70 million; €56 million) towards a MYR 300 million target for its fourth fund, Private Equity International has learned.

The firm launched COPE Opportunities 4 in 2016 and held a first close on MYR 200 million in October 2017 and a second close on MYR 275 million in early January this year, a source with knowledge of the fundraising told PEI. A final close is expected by the third quarter of the year.

The fund is almost four times larger than its predecessor, COPE Opportunities 3, a 2013-vintage vehicle that closed on MYR 80 million and is currently being deployed.

The firm’s existing investors, mainly Malaysian public pension funds and corporations, have backed its latest offering, the source added.

COPE Private Equity, previously called CMS Opus Private Equity, typically backs consumer, manufacturing and oil and gas companies in Malaysia.

The firm exited its investment in engineering services company Serba DInamik in January 2018, generating a money multiple of 8.9x and an internal rate of return of 79.2 percent for its investors, the firm wrote on its website. COPE invested MYR 35 million in the company in June 2013 via two of its funds: COPE-KPF Opportunities 1 and COPE Opportunities 2.

COPE Private Equity manages five private equity funds of more than MYR 500 million. As of Q4 2017, MYR 150 million COPE 1 and MYR 61 million COPE 2 have achieved gross IRR of 13.9 percent and 52.4 percent, with realised money multiple of 1.7x and 3.5x respectively.

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COPE Private Equity exits Serba Dinamik

Kuala Lumpur, Monday 29 January 2018 : COPE Private Equity (COPE) fully exited Serba Dinamik Holdings Berhad (Serba) in January 2018, capping a successful 4-year investment in the integrated and specialised engineering services company.

COPE invested in a subsidiary of Serba for MYR35 mil (USD9 mil) in June 2013 via two of its private equity funds: COPE-KPF Opportunities 1 and COPE Opportunities 2.

Successful international expansion
Over the period of COPE’s investment, Serba grew its revenue 4.9-fold and net profits 5.3-fold. For the 9 months ending 30 September 2017, Serba’s revenue and PAT was MYR1.9 bn (USD490 mil) and MYR227 mil (USD59 mil) respectively.

The foundation of Serba’s growth was the result of a concerted push to develop business outside its home market of Malaysia to the Middle East, Indonesia, and the United Kingdom. For the 9 months ending 30 September 2017, 71% of Serba’s revenue was contributed from its international operations, up from 45% in 2013.

Final result
The decision to divest Serba was made in view of the approaching maturity of both private equity funds. With the full exit in January 2018, COPE has more than covered the cost of its investment, generating IRR of 79.2% and money multiple of 8.9x on the capital invested.

Dato’ Dr IR Mohd Abdul Karim,Group Managing Director and Group CEO of Serba Dinamik, said: “We are grateful to the COPE team for their strategic guidance and counsel. They have played an integral role in helping us to execute our international expansion.”

Dato’ Azam Azman, Managing Partner of COPE Private Equity, said:“We are privileged to work with the exceptional management team led by Dato’ Dr IR Mohd Abdul Karim. With a strong track record and record order book, we are confident Serba Dinamik will continue to scale new heights.”

Ends.

About Serba Dinamik Holdings Berhad

Founded in 1993 by Dato’ Dr IR Mohd Abdul Karim, Serba Dinamik is an energy services group that provides engineering solutions to the oil and gas (O&G) and power generation industries. Its main activities include operations and maintenance (O&M) services and engineering, procurement, construction and commissioning (EPCC) works.

About COPE Private Equity

Founded in 2005 and led by Dato’ Azam Azman, COPE Private Equity (Formerly known as CMS Opus Private Equity) is a Malaysia based private equity firm focused on making investments in small and midcap growth companies with regional presence. COPE have been active in the market since 2006 with AuM of over MYR500 mil (USD130 mil) over 5 funds.

www.copepartners.com

CONTACT

Gavin Tan
gavintan@copepartners.com
Tel: +6(0)2031 9008

CMS Opus Private Equity changes name to COPE Private Equity

Effective today, CMS Opus Private Equity shall be known as COPE Private Equity. As the firm prepares for its next chapter of growth, the name change will represent a fresh identity and perspective.

Launch of website

In conjunction with the change of name, COPE Private Equity is pleased to announce the launch of its corporate website at www.copepartners.com.

Dato’ Azam Azman, Managing Partner of COPE Private Equity, said:

“We are delighted to announce the launch of our new name, COPE Private Equity.”

“With a seasoned team, excellent track record and proven strategy, we shall continue to do our best in generating outstanding returns for investors. Thank you for your continuous support and confidence in us for the past 12 years.”

Ends.

About COPE Private Equity

COPE Private Equity is a mid-market private equity firm established in 2005 with assets under management (AuM) of over MYR500 million. To date, the firm has delivered excellent results for investors:

  • Preqin, the leading alternative assets publication has identified COPE Opportunities 2 as the top 5 Best Performing Growth Funds globally¹.
  • The Centre for Private Equity Research has awarded COPE Private Equity with the top exit performance in H1, 2017 in South East Asia with Money Multiple of 7.3x². 

¹ Data as at Q3, 2017 for funds established between 2010 and 2014

² On the listing of an investee company of COPE 1 and COPE 2 on 8 February 2017 on Bursa Malaysia

www.copepartners.com

CONTACT

Gavin Tan
gavintan@copepartners.com
Tel: +6(0)2031 9008

Serba Dinamik on path of steady growth

TEN months since its flotation on Bursa Malaysia, Serba Dinamik Bhd is showing the kind of steady growth that its initial public offering (IPO) investors must be pleased with.

On Thursday, the stock hit RM3, which is exactly double its listing price of RM1.50 a unit. This has led its market capitalisation to double since then to RM4bil, making it one of the larger listed engineering firms on Bursa Malaysia.

This week, Serba Dinamik, which undertakes operation and maintenance (O&M) as well as engineering, procurement, construction, and commissioning (EPCC) works for oil and gas projects, posted its nine-month net profit of RM229.5mil, which already makes up 93% of its previous full year results.

The nine-month net profit, which represents a 44.6% year-on- year growth, was also above consensus estimates.

Serba Dinamik, which traces it roots to Sarawak with Cahya Mata Sarawak Bhd’s private equity arm CMS Opus PE Sdn Bhd also being a 16.1% shareholder, has an impressive client base, with an estimated 57% of its revenue coming from the Middle East. That turned out to be a concern this mid-year, when Saudi Arabia, Egypt, the United Arab Emirates and Bahrain decided to cut ties with Qatar over allegations that it was supporting terrorism.

However, this has not been a problem as Serba Dinamik group managing director and CEO Datuk Mohd Abdul Karim Abdullah explained then that the company’s O&M services in the Middle East were not affected by the Gulf tensions.

“We are gearing up for opportunities to possibly provide our support to gas producers in Qatar, due to the vacuum of contractors from the countries pulling out of Qatar.

“The situation has not jeopardised the logistics of selling oil to the buyers, namely, South Korea, India, Japan, and China, among other countries,” he said.

As of the third quarter ended September 30, Qatar remains as Serba Dinamik’s second largest contributor by country, contributing 23% of the total revenue, at RM150.91mil. Revenue contribution from Qatar was at 16% in the full financial year 2016.

The bulk of the company’s earnings is still derived from Malaysia, via O&M services, as well as its water treatment plant EPCC contract in Kuala Terengganu.

Malaysia contributed RM201.8mil or 28.9% of the total revenue during the third quarter. Total revenue and net profit for the group’s third quarter stood at RM653.32mil and RM68.03mil.

In its latest quarterly filing, Serba Dinamik says remains optimistic about its future prospects and expects that the group will continue to generate positive results for the year.

It announced last month that the group will be establishing a chor-alkali plant in Tanzania, through a partnership with Junaco (T) Ltd. A chor-alkali plant produces chlorine and sodium hydroxide, which are commodity chemicals.

This will mark Serba Dinamik’s maiden venture into Africa and the company looks to further grow the business in the region.

“It also reaffirms our plan to grow the asset ownership business model, which would lead to further enhancement of our EPCC and O&M capabilities.

“Apart from expanding our asset base, the company has also managed to secure various new contracts as well as manage to obtain renewals for some of its existing contracts in the O&M and EPCC segment.

“In order to ensure the company’s continuous growth, the group plans to leverage on its core competencies of operating within both the oil and gas and power generation industries, as well as expanding into water treatment and utilities industry,” said Serba Dinamik. Apart from
that, Serba Dinamik announced that its wholly-owned subsidiary Top Luxury Sdn Bhd, has been awarded a contract to undertake the construction works for the Pengerang eco-Industrial Park (PeIP), pursuant to its Pengerang development plan in August this year.

The contract, valued at RM400mil, include the establishment of Malaysia’s first maintenance, repair, and overhaul (MRO) and inspection, repair, and maintenance (IRM) Global Centre of Excellence.

Construction work is due to commence by the first quarter of 2018 and will take approximately two years to complete.

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CMS Opus invests $4.5m in My-Sutera; exits Damini, Delta Express

Malaysia’s CMS Opus Private Equity (COPE) has invested $4.5 million (MYR 20 million) in the country’s largest school uniform maker My-Sutera even as it made two investment exits from water meter firm Damini Corporation and logistics provider Delta Express in the first quarter of this year.

In an announcement, the private equity investment arm of Cahya Mata Sarawak said it “had a busy first four months of 2017, successfully finalising a number of investment exits and undertaking of new strategic investments in growing consumer segments.”

The investment in My-Sutera, that has two well known brands “Canggih” and “Ammaro,” is expected to propel it to become the number one producer of school uniforms in Malaysia. “The investment would also assist the company to further expand its product lines and to enter new markets,” it said.

The investment indicates the firm’s confidence in the consumer market in Malaysia. In fact, COPE has invested in fresh fruits retail chain MBG Fruits picking up a 31.5 per cent stake in the company last year. That was a debut in the retail segment for the private equity firm. Other than school uniforms, Shah Alam-headquartered My-Sutera also produces corporate uniforms and has embarked into specialised fire retardant material-based uniform for use by fire brigades, military personnel, shipboard engineers, chemical plants and the like.

Meanwhile, with regard to exits, COPE made an exit from its 29.37 per cent equity stake in Damini Corporation on March 31, 2017 via redeemable convertible preference shares. The firm had invested Damini, a major supplier and distributor of water meters and metering solutions, in 2015.

Further, COPE also successfully exited from its effective equity stake of approximately 45 per cent in logistics forwarding and shipping service provider, Delta Express on April 17, 2017. All investments in Delta, which is a subsidiary of Swift Haulage Sdn Bhd, were made via redeemable convertible preference shares.

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PE-backed Serba Dinamik debuts at Bursa, raises $135m from IPO

CMS Opus Private Equity-backed engineering solutions provider Serba Dinamik on Wednesday listed on the Malaysian stock exchange, marking a steady debut. Serba Dinamilk’s offering is the biggest IPO for Malaysia since 2015.

The firm that listed on the Bursa Malaysia to raise over $130 million, had offered a public issue of 26.7 million shares under its IPO which had been oversubscribed by 4.96 times. The stock opened at MYR1.53 on February 8 on the day as compared to the offer price of MYR1.50 per share.

The company provides solutions to the oil and gas (O&G) as well as power industries has a total market capital of over MYR2 billion. Private equity firm CMS Opus had invested in Serba Dinamik in 2013 and sold a portion of its interest as part of its the listing exercise, the private equity firm said in a statement on Friday. Serba Dinamik, currently has tendered for about MYR5 billion worth of EPCC jobs in Pengerang, Johor and the group is awaiting the outcome of its bids, which is expected to be revealed within the next six months.

“Theoretically I can say that more contracts are coming in. In Malaysia, as you can see in the last one week, oil and gas companies have been announcing awards being received,” the company’s Managing Director and CEO Datuk Ir Mohd Karim Abdullah had said on the day of listing.

About 60 per cent the firm’s revenue is generated from its operations in the Middle East, while the rest is from local activities. In fact, CMS Opus has assisted the company’s regional expansion particularly in Indonesia and Middle East.

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Malaysian PE firm CMS Opus makes retail debut, picks 31.5% in MBG Fruits

Malaysian private equity firm CMS Opus Private Equity Sdn Bhd has picked a 31.5 per cent stake in fresh fruit business MBG Fruits Sdn Bhd, for an undisclosed amount, marking its debut in the retail sector.

In an interview with DEALSTREETASIA, MBG founder and chief executive officer Adnan Lee said, he and his mother remain the majority shareholders in the company, holding 68.5 per cent. Both Lee and CMS Opus declined to reveal the total investment made by the private equity firm.

The MBG deal was done under national private equity management firm Ekuiti Nasional
Bhd’s (Ekuinas) Outsource Programme, as CMS Opus is among the outsource partners, Lee mentioned. CMS Opus is the private equity unit of Cahya Mata Sarawak Bhd.

The PE firm has previously invested in the oil & gas sector, engineering and manufacturing companies and even a water treatment chemical distributor. It had in April last year divested entirely from the oil and gas sector.

Although the firm has said that it has been working on diversifying its portfolio, an executive at CMS Opus told DEALSTREETASIA that it was not a formal strategy to go into the retail sector but rather an effort in spotting an unrivaled investment opportunity in MBG.

“We did not plan to go into retail. Our investments are made on a case by case basis. Retail is generally very competitive, we have to see what the competitive advantages each business has,” he said.

In recent months, a few other private equity firms have been investing in grocery businesses, such as Navis’ investment in BIG Independent Grocer, CIMB Private Equity and Mitsubishi Corp’s deal in Jaya Grocer, and KV Capital’s investment in TF Value Mart.

Explaining the rationale behind investing in MBG, the executive noted that the MBG business model is a blue ocean strategy. “They penetrated into a segment where no other players were in. They have expanded to a size where there are no other competitors within the convenience fruits retail concept operating within that size. The perishable retail industry is a hard segment to manage,” he added.

When asked why the company decided to take on private equity capital after two decades of operating, Lee admitted that MBG had not been actively looking for capital. “They approached us. I had not known about private equity or venture capital prior to this,” Lee said. Lee took over his grandfather’s fruit retailing business in 1994 in the wet markets, and expanded the business into malls in 2004.

MBG has grown into a company with various departments like finance, human resource,
marketing, operations and more. Lee felt that it made sense for the company to engage
better expertise in certain areas where its core team lacked expertise. “With CMS Opus, we can strengthen our finance team,” he added. Lee noted that despite having CMS Opus on board as a notable shareholder, he will continue to steer the direction of the company.

With the investment, MBG aims to open another 50 outlets focused around Klang Valley over the next five years. “For the past 10 years, we have mostly grown through internal cash flow. This investment will give the company enough capital to open another 50 outlets without utilising the company’s cash flow,” he said. The group now runs 32 outlets in the Klang Valley.

Beyond Malaysia, MBG has plans to expand into Indonesia. Lee said, the group will look at how to integrate technology into its business plans, but will need to build a team of experts for that to happen. “We will need a different team and strategy to do that. We need to know how to sell and how to manage our perishable products online. It’s not easy. For a lot of the grocery delivery businesses, fresh food remains a small portion of the customers’ purchase,” he said.

On the company’s finances, Lee said, “the group, on the whole, has been making profit.” The executive from CMS Opus noted that the group’s revenue momentum is not slowing down. The group’s revenue for FYE 2015 is MYR56.7 million, growing at a CAGR of 19.4 per cent from 2013 to 2015.

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CMS Opus divests all O&G investments, to amp up diversification strategy

CMS Opus Private Equity Sdn Bhd has completely divested from its oil & gas investments and will further focus on diversifying into other industries, an executive aware of the development said.

The executive quoted above confirmed to DEALSTREETASIA that the firm is further
expanding its portfolio to cover broad-based sectors, to diversify and broaden quality asset opportunities for the portfolio.

The move to diversify began in 2013, this executive said, while adding that this would continue to underpin the firm’s strategy. The sectors could include engineering services, industrial products manufacturing, food manufacturing, healthcare and medical devices manufacturing and services, education, and general fast moving consumer goods retail businesses with high growth prospects.

It was not clear if the firm will reinvest in the oil & gas sector,  but this executive, who declined to be named, alluded that CMS Opus would not be discounting opportunities there. According to parent company Cahya Mata Sarawak’s 2014 annual report released on April 8, CMS Opus has to date, seven investee companies in its portfolio with a current asset under management (AUM) totalling MYR291 million ($80.2 million).

For the financial year 2014, CMS Opus returned investment capital amounting to MYR10.17 million ($2.8 million). In January this year, the firm exited its 2011 investment in Trisystems Engineering Sdn Bhd, with a capital return of MYR22,212,688 ($6.2 million) representing an internal rate of return of 30.03 per cent and a money multiple return of 2.47 times.

CMS Opus acquired a 20 per cent stake in Trisystems in April 2011 for MYR9 million ($2.5 million), through its COPE-KPF Opportunities 1 fund. Trisystems is leading in the field of process instrumentation and control, filtration and combustion in Malaysia. It also offers automation systems, process packages solutions and provides custom engineering design, assembly, testing, installation, commissioning, support and training primarily for the oil and gas industry. CMS Opus’ investment has benefited Trisystems in securing double digit growth over the span of the investment horizon.

In March this year, CMS Opus acquired a 30 per cent stake in utility and water related player Damini Corporation Sdn Bhd through its COPE Opportunities 2 fund. The proceeds from the investment will be utilised for merger and acquisitions and as growth capital. The principal activity of Damini is supplying chemicals, reagents, equipment for water treatment, water meters, engineering services to the water distributors, chemical solvents and marine gas oil for the oil and gas industry.

Local media had reported that Damini plans to grow through acquisitions, supported by CMS Opus’ capital injection. Damini also intends to pursue a listing in the next two to three years. “In terms of profit track record, we have already met the quantitative requirement,” group managing director Borhanuddin Ramli told local media earlier. “However, we would like to further strengthen the qualitative aspect of the requirement before we apply for a listing,” he had added. The company reported a turnover of MYR130 million last year, with 70 per cent coming from its water industry operations and remaining 30 per cent being contributed by its activities in the oil and gas segment.

CMS Opus is a sharia-compliant private equity firm jointly established by Cahya Mata Sarawak and investment advisory firm Opus Capital Sdn Bhd in 2006. The firm primarily looks at opportunities in unlisted emerging growth companies in Malaysia and the Asean region. Its related company, Opus Asset Management Sdn Bhd specialises in fixed income investment and has a current asset under management of MYR2.53 billion ($702 million) as at December 2014. Cahya Mata Sarawak is an extensive infrastructure facilitator in the state of Sarawak in eastern Malaysia.

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KLCC, 50088, Kuala Lumpur, Malaysia

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