Private Equity 💲💲💲 Investments in Malaysia (beginner blueprint)

Private Equity 💲💲💲 Investments in Malaysia (beginner blueprint)


the broadcast is now starting all
attendees are in listen-only mode hi welcome everybody to this Casey la
semana TV show and it’s very excited to see you all here
can you just type in a good morning to CF here we have like good friends new CF
do Chang foo he’s a independent financial planner and here’s I think
done a lot planning for customers in Keaau area and also in Penang I think
mostly in Penang and good to have you here you it’s fun to do table running
happy dancing this for a long time yeah it’s a good morning good morning to
everyone actually good because the money is still
hazy by in Penang I think like a video so we we still got some haze here so no
I think a lot of our back things is happening in our country as everybody
knows and including the haze is one of it which is i guess i guess is the the
most severe one affecting oh yeah i felt like people know they got allergy to the
to the haze and i got hospitalized I heard like several cases do you have
friends like that yeah actually I just recover from sort of sorrow can last
week so I would say how I’ll help the haze I hold the haze accountable for
that thanks for although some people will respond and have a healthy TP
thinking and Lee oh great so let’s get started today you know this is something
about private equity investment which i think is of like alien terms to to most of the
people here because when we talk about like fun
all the times you’re talking about you need trust fund where the invest in the
public listed company or some may be some fancy fund that invests in like
commodities or even like global markets but now it’s like talking about private
fund so I’m also very interested to know about this thing so a let’s get started
with it yeah thanks Casey for the introduction
so just a brief intro for myself I’m MC F Lee Ching foo for sure I’m financial
planning manager watching and copy of management subsidiary of chain coach at
accountants attached to in KL so I take care of the Penang branch the financial
planning division and Cheng also a practitioner we are standard FA right so
perhaps if I could switch on my webcam so yeah that others can see me perhaps
there will be more interactive okay nice let’s see how this goes right right okay
stopping up yeah okay so you see me yes I see you okay all right that’s great
okay hi everyone right so let’s get right to
what we want to I want to share with you today
despite the hazy condition right I’m also like you know indoors right so
why this topic after a long what we call here today right on Casey Laos maybe not
then case as a it’s been long time so you do do do one any interesting topics
like I say they’re a this topic might be something that relates very close to
heart for many Malaysians you see because certain things that
comes through our way for the past two three month hate is one of them and low
commodity prices or one of them some stock market uncertainty of course and
also when it comes to currency I think that does not requires any more
explanation so the thing is if you are already invested in you know stock
markets or most of the investment out there it’s likely that you’ll be in one
way or another impact the fluctuation in ring gear against USD
and the fluctuation of the stock market especially kose so this topic actually
talks about how to actually get away from all these what we call as a
volatility right okay in financial planning terms the volatility into the
currency or the stock market and all those stuff because this is a very
interesting phrase that I picked up recently they say when you invest in
stock market in sa malaysian stock market in today’s environment we say
it’s something like hex you lose tells you don’t we normally has you lose tells
you winner right but this has you lost touch if not mean what it means by that
is that ok you might have gained a certain amount that’s over 10 or 15
percent in your stock portfolio but if you compare it to no ringgit value
versus even sing dollar US dollar you’ll see that it has depreciated almost the
same amount and I really can feel for my clients who are mostly married couples
that have plans to send the kids overseas in due time right not too long
but not too short either probably four or five years right especially your kids
are in secondary school so what happened is they’re accumulating for that and
they realized that hey I make some games this year but again it was like offset
by the current the weakening of raingear due to what you know everybody knows
when we get we can meaning that if it stays we can all was continued to weaken
you will experience a situation where by this amount money you grow it to a sum
already and you want to especially want to send your kids overseas so that is
where the currency fluctuation currency impact
takes place and you realize that you really shot of what you have allocated
in the first place so that means by there so of course for those who don’t
know me already this is my website how to finance mini-com to
check it out just a quick intro of my principle from general chatter
accountants and these are what we are going to cover today as promised right
so I’m going to go to this real quick but the one day thing that I want to
stress is first of all some disclaimer to say that um it is not regarded as an
offer to invest right after Forman is not necessarily indicative of future
performance you should always consult and know you know know your own risk
profile before investing and lastly there will be no disclosure of any names
of any companies or any financial institutions for that matter okay in
this presentation of course I’m going to answer any questions on that but if
you’re interested to know further you can contact me directly after this
presentation so let’s get right to it now what is private equity right private
a mutual funds or even stocks were really called as a public equity meaning
there anything in related to this public equity publicly available investment the
informational probably available you just buy or sell those public security s
what whatever price you like right you feel is under value then you buy you
finish over value you finish that will reach its potential than you sell right
again you know value investing and all those concept coming to mind so when
it’s private equity, now private equity is a different beast by itself what I says
by that probably quickly it’s all about private sourcing and analysis now what
it means by that private sourcing and analytics meaning that there are there
are deals what we call investment options there is not normally available
to the public but it takes a specific group of people or fund manager with a
specific skill set right not just any Tom Dick and Harry specific skill set to
no of this still because of their personal or professional network okay
Tecna still in take this deal okay and most of the time is identify
opportunities for these deals techniques use and the next step is to a few
decisions due diligence as normal you want to see whether what you are worth
while you are about to be left in with it’s some things as you lose money or
it’s likely to gain money try all three whether or not for this kind of projects
or you know start of companies okay diligence is done you cross expose mean
that will go through more to this detail closing in there you sign agreement to
fund some injection capital into this project or company or stock companies
and things like that so you actually sign an agreement with the PPP division
these companies have to say they’re okay in these three years I’m going to
provide this kind of capital to you but after three years I’m going to cash out
and whatever interests that I generate from their given demise so this one is
known as no closing everything has to document SS Minnow phone ringing yeah some distance away you can hear that I
think I’ll say it’s like no maybe blocking your phone or something yeah
yeah I didn’t it would ring again I’ll get through to it but I think it stopped
ringing alright so so after the deal was closed
then it comes to active portfolio management so
fund manager would have an active role to play in a no or active role to play
in some way or another in the direction of how the project being run or how the
companies are being managed okay and those things are normally not public
okay not public and after a certain defined time frame they excel at from
digital cash are all whatever profits and initial capital from the initial
investment so so how is the exit plan lies is that they are going to be like
the private company is going to be listed and then is that considered
exhibiting all they have do we sell it to someone else
yeah it could be I could be XE it could be a equity or state ownership right
it’s imagine if you are we are investing Alibaba in the very early days right and
yes we are the shareholder of Alibaba right and a price probably it’s you know
IPO price or something like that so exit meaning that you eventually get into
summarize understand the company because public if it does not then I’m going to
cash out whatever initial capital that investor plus the profit as well so it
could be one of one of the ways these are the common common ways okay okay
yeah I mean keep the questions coming if you have any from audience or from you
okay so it basically means that we probably could ease you you take part in
a company that is still running business or privately yeah that’s right that’s
right normally yes yes private company or
project I would say okay yeah again private equity a complete the public
equity what we call as okay this is why I write okay right it is some pretty you
know primarily the different piece and if you if you are not lazy and you do
not have this herd mentality okay and if you’re a long-term investor then it
could be for you and why why we say that is because if
this nature of equity is something that it actually locks you down for a certain
period of time meaning that can you see from view sourcing to exit that is the
duration of time we are talking about right it could be three five or ten
years okay so in between you’ll be getting some dividends income just like
you’re getting top stock but your capital normally would be locked out
okay to a certain extent right so again if you looked at from another way from
another day you know it could be also for someone who are you know impatient
impatient like I say it could be as short as three to five years so if you
want to see something of a return in three or five years time this could also
be with you because you know in today’s volatile market one day you invest into
something and I say in copy equity and what happened if if next year the stock
market under gonna crash or certain correction so it takes time to recover
right and of course you say that all these are still good companies but what
if you really your funds accumulated and you need to use that in three or five
years time for children’s education so when we actually present this this
private equity investment option especially to people who are doing
business to business owners right they actually resonate with business owners a
lot because they know that non-business actually they say that business or
business owner they’re mainly returned from the welfare is from the business
and it provides more than what stock market or even unit trust came forward
to them right of course having said that yeah you will have a question to say
they’re a how about you know like well-known investor Warren Buffett or
even one good friend Casey right mister keuner mr. Cooney oh yeah we just donate
50 million 50 million cash right to appeal and US efforts
stay right so um this I’d be the the the Oracle investor though that makes a lot
money from from from public equity stops but when we analyze one step further one
step further one level deep down you realize it’s not the program’s the canoe
you know they are a better investor because they are businessmen first right
we are not an investor first yeah businessman first so the terms they
think long term and they think from business perspective and that’s why I
mean they’ve practically it’s just about business so if you are you’re doing
business you’re a businessman actually this probably the concert you resident
very well of the field okay I will go to the details of how these kind things are
structured okay then this is our info to say that are why private equity okay
this age at this age right you can see there are this very famous University
here University in the US and this university actually runs an endowment
fund and naaman university fund so it from its report right for 201 3 in 1980
you can see that on the left the grey color this is the traditional portfolio
of most investor especially if you just started up started off right investing
you have like equity and fixed income in FDR bonds are so rare traditional right
we call it as an allocation but now all right now you can see that pension funds
and all those big funds and if you have they actually
structuring the portfolio honest in a sense that it has a quite a sizable
lion’s share of private equity besides other things of course like for equity
real estate but not like on natural resource right but you know again this
does not reflect every fun will have this kind of allocation but just to say
that our equity is actually growing in
popularity in terms from institutional investor the institutional level funds
level kind of investor so you can see that they like this productivity because
to a certain extent is actually more predictable right more predictable if
you have encountered the right views and the right projects any question Casey
from our audience have a good let’s take one meal pause
over here so here you show a child what is this
the potential return by the analyzer we’ve done of different assets yeah this
is actually annualized return I forgot to credit the sauce but at least from
Bloomberg this chart right I think this chart will you actually
more meaningful if coupled with this right so besides the return okay we also
want to look at volatility risk no water because these two comes together so what
it means to say that volatility means that stops no high volatility it’s
likely to swing up 30% is also likely to swing down 30% in the same year you know
during a very very low volatile market because that is the nature of the stocks
and someone told me about that okay what do you expect up stops do you explain
all to go up and never swing down I mean no then they’ll be missing you know
stocks or even commodities it’s normal for it to swing because it tests for it
does for no stocks or commodities it’s like you expected Christmas you know
christmas is coming every year so you have to expect that right but private
equity is not so volatile a reason being is because the underlying asset itself
okay I’ll explain mondo what the underlying asset of these private equity
right but just to keep in mind any investment and not just private equity
alone we look at two things which is the return and volatility risk so what it
means by that let me skip to this what we call as a
risk adjusted return okay if you go to places like fund Superman right a for
every fund you can see that there’s this metric called Sharpe ratio right Sharpe
ratio what it means not the Sharpe ratio Sharpe ratio actually takes your return
and it divided by the volatility or the risk of every investment okay in these
terms it means that what is the average return of this investment considering
the risk factor itself because we don’t only want to look at the return we also
want to look at the risk now something that gives you 20% return option air and
option B 20 percent return per year one there is the volatility imagine it is
also 20 percent compared NATO quality or 10 percent 10 percent see let’s wallet
out which one you want to go in of course you want to go it what we call as
the one that gives you 20 percent but with a lower risk so what is the metric
to quantify that it’s called risk adjusted return the return divided by
the number of the risk so this is what we call Sharpe ratio and you’ll be
surprised to see that and this from this form independent research act is not for
me aha this US data shows that private equity
or we over the past ten years it has it has what requires a higher risk adjusted
return compared to public equity so higher return lower risk okay and the
thing is a lot of people who ask that when I first presented to my you know
tomorrow day a client my clients and they have a question to say that a new
why isn’t there anyone or why I have not heard about this before okay the reason
is actually quite simple because it’s predominantly reserved for only tension
tension from ietf you know and all that endowment fund a
little faster run by university like Yale University I’ve shown the example
family office institutional investor dry your insurance companies and all that
and also for the ultra high net net worth individual so it is normally for
this group of investor and ex-wife or retail investor
many people have not heard of this the other thing of course we have cover is a
good diversification from traditional portfolio of stocks and bonds this one
and you know that already we have discussed investor change the underlying
assets private companies the significant go possibility before they go public
okay but this is just one of the option we go to an example later right
generally higher risk return a reward due to a big asset holding because this
miss Vedas are not stopped right and it’s not really a factor is actually not
affected by any markets and demon for the matter which is what it means right
on the one hand it’s not affected by market sentiment which means that even
the market down you can still make money back it up you can still make money but
not about not as much as the Michela right and the other thing is about
illiquid because your capital a lot so again some people will actually have has
to balance it up between how long my capital is being lost to how much return
that I am ultimately or eventually getting from this private equity as well
so again the private equity assets are you know it liquid meaning that it is
you invest then at the end of the period you’ll catch up
so in between right in between it is common to say that your capital unlock
to a certain timeframe it could be three to ten years depending how in structure
right so you can’t read it a trick right there’s nothing to check yes there’s no
trading there’s nothing to check on your on your or whether today the price has
gone now or what so really really look at long term okay you really have to
know I have a patient and this point is also very important which means that the
private equity return it’s very highly dependent on the fun manager capability
to source for good deals and to squeeze out the
return of these profitable deals or private equity investment because market will have no effect on private equity investments but the manager capability to structure a
deal and the source of good deals and the filter of the bad deals are very
important because if you get into a bad deal the investor will actually lose
money right so in short the volatility volatility is this less because um it is
not traded publicly it’s more like property where you you don’t like sell
and buy within a man or things like that where you do it over three years so
that’s why you say emotion is taken out of that
so the volatility is less that’s why it is right and the holding holding periods
long so that that’s gives the nature but I want what I’m curious about is you
know my property will be investing you know business that is not providing the
financial report publicly right so it’s like okay yeah but their own and to the
potential investor where only the fund manager will have access to that right
you know and what we know is a start-up rate the percentage of failures is quite
high so yeah as you say so the fund managers skill is very important he
really need to pinpoint like maybe just one out of 20 companies going to make it
so you have to find that one company out that 20 so yeah yeah we’re curious how
can you do the up yeah it’s also a this option but for me I’m going to present
to you like how the manage the risk I say I always want to look at the wrist
because I always put myself in the shoes of my clans or the investor right it may
be known as collateral okay when by by the epicenter that’ll be
pretty clear right so we have come to us pensions and okay this is again an
independent report alternatives I
fresh fun so do not be confused private equity or hedge fund private equity you
have the under London underlying fundamentals to back it up meaning that
you are real they are real tangible asset or the real tangible cash flow
hedge fund to differentiate hedge funds hedge fund it could be in the same
package as well but hedge fund what we call as a they are probably still market
correlated immunity are still related with the market for example if they
hatch fund that bets like Joe serosa well more than ten years ago twenty
years ago when it bet against a certain currency I made a type a for Indonesian
Rupiah Malaysian a good new for excuse me so he’s making a bet so because you
know that ok this economic crash is coming your comments doing bed I’m
betting that the currency we go down and he made a huge profit from there and
those a hedge fund right that’s fun so we are not today we are not talking
about hedge fund right so it talked about which is have the very solid
fundamentals you have ten your access to back it up because we while I stretch
this a lot because I want to look at the risk and we want to know the reason
wealth manage and you see that over the past ten years private independent
research survey tells us that more and more allocation are being invested in
private equity because it’s more certainty and a very important one
certainty when you have less volatility in a certainty okay so let’s get to some
really the details of it so when it comes to private equity there are few
things that an investor or a common corner what we call as terms that
everyone want to know about first is what we call as absolute return
absolutely return meaning the private equity it’s like your binary binary
number it’s at zero one is whether you don’t let you make money on your own
money that’s as simple as that there is nothing to say that lets say if let’s
say I run unit Trust Fund of fun that immerse in asia-pacific market stock
market now I say pursue market you know China is one of the initiative the
market so what happened if China you know their China stock market has
dropped you know like 30% now if my funds if only not only in China stomach
I mean in Singapore invest in Vietnam or so my funds actually
the family says if I manage a specific fund my fund drop by only 10% of Lima
but I benchmark it against overall okay my peers and my McKenna know China
market over even though the fund dropped ten ten percent if the market drop 30
percent then I say I still perform because I outperform the market and this
what we call as a related return okay but absolutely turn it’s a term to say
that you either make money on you don’t make money you don’t tell me whether you
outperform or underperform the market so private equity is under this category
okay it has nothing to avenge my against it’s either you lost or you make okay
very excite thing okay loss or you make so state of us the second thing you want
to be aware of this term when it come to priority is very close and not now okay
again leave me reiterate close and meaning that is normally not open for
subscription or open all the time it has a limited period because time and
projects or these are companies or opportunity don’t wait for wait for no
man okay so only this time if you don’t
invest then that’s it so it’s normally closed and and it’s normally has a
lockdown lysate three five or ten years before you cash out now the underlying
thing how a fund manager actually invest in a private equity is in one of these
method one request equity financing meaning that I inject let’s say
Casey has a company and a startup company and I inject a capital of a
certain amount as a working capital for Casey Laos con what business you want to
do Casey if you are not doing this like I don’t know let’s say more about heaven
more about so mobile air ok so mobile I say they’re very prospective or more
about it is something like that texia or you burn so very protective and imagine
I encounter this opportunity very early in the days i say they in jail a hundred
thousand US dollar okay okay Siri a financing so in return I get a
10% or 20% stake in cases company even though it haven’t go private so this is
what you mean by equity financing no it’s not buying a stock you know mark
Erica start your own a company but this is more on a private because private
company right so this one way you might invest in private equity the other way
is called debt or loan meaning that mobile app Casey’s mobile probably you
don’t want me to go in and having a stake in the company I and you say that
okay I don’t want you to come in by still one of my student for my money
yeah so I didn’t check this 700k USD in return I sign an agreement a do I say
that okay this tree the evident at the end of the next three years minimum
I’m getting in a capital but in between in between every year you pay me fifteen
percent Interest this one night a year long a loan shark
right so 15 percent interest so 16 percent interest our one hundred care
alright so this is what we call debt and low not so I cash out at the end of the
period but in your interim and getting cash my rental income from you so this
car has a debt alone those these are also possible ways to structure it right
the next one will require structure there
structured that meaning that it is almost like he said under under under
three years it’s like a Devin loan but if they seem about it goes public and
after three years ago IPO I then I want to convert this into an equity stake in
case is more than a company so this is what I mean by structure that okay it’s
a combination equity financing and they’re all owned right so the other
thing the other thing would be what we call a ceiling alone okay see me alone
meaning that Chase is mobile it might not raise capital from me alone
so we also raise capital from other investor okay and see me alone it refers
to the investor normally in terms of some financial institutions are that
long the most money to case is mobile a company so he has what we call a see me
alone right so if KC mobile a company goes from
right whatever tangible asset to be liquidated to be repaid by the senior
lender has the right the first one he claimed was the first right and first
choice Liana give me alone okay so when I go in so it might it
could be that I’m not seeing alone so after see me alone can I get love if
I don’t see me alone lender but I could write on the back of the senior land
right on the back so I’m also a senior lender but my capitation 100 kala
compared to let’s say 1 million or 1 billion
okay Mason Mason I financial is a is of
course it’s almost like I see me alone but just for this presentation
simplified it is comes in second tier after senior loan right it doesn’t write
on the scene you know and the other thing is that when it comes to these
kind of private equity views so again the skill set of the
to structure and the source for profitable deals are very important but
again a good family would not be so dependent on his skills and go work on
didn’t to say that when I go into this investment to make money back okay
because nobody can guarantee so what’d he do he managed the risk he managed the
risk by having a collateral now in case of a company the collateral could be the
tangible asset the tenderizer now if it’s a service company the collateral
could be an intellectual property that you could bring value to the market that
if you want to sell in the market it has dollar and cent attached to it and this
is not what the company say if I’m the family
I want to engage an independent appraiser or valuer to actually value
this intellectual property or tangible property to say that whether this kind
of property is really worth twice the market value so I will engage evaluate
or value that so that when really a project or a company or a deal proper at
least I know at least I know I am getting something but I have your essay
the collateral to back it up it’s like a house in Iowa is a house why when we do
know you want to sell a house if you know sell market you immediately the
bank have to have a valuation map it’s not to say I say my house what is the
market price it doesn’t work that way so if you use the same concept then I think
I it’s very very quite a simple to understand of course there might be
situation where you really cannot have any collateral a new startup a mobile
app right so it’s not well known yet you can really put a dollar and send into
that yeah so how do manage the risk to say that if a private equity opportunity
comes a fund manager manage this by not only investing in one
project so it maybe only allocate 10 percent of the total capital raise only
to that project and that’s why you limit your limit your downside
okay in case there is any right so again if I summarize it in a in a public
context on your arrow you say that on the very bottom part you have a caller
true downside protection what we call as a
genius your collateral I so downside protection things go sour I have to
accept to let me up so if your essay is 1 it was 1 million or 1 billion
I only loan you half of the value 50 percent loan to ratio so meaning that if
this project from liquid to you I said I have more than enough to cover what I
loan you you cannot loan the food 90% loan act like the house so it really it
normally doesn’t work that way so the next best thing is about what we’ve seen
a blue blue section here is what we get their face returned I say as long as my
catheter was wrong by investing in this company on this project every year I’m
getting a definite return ok but one payment of principal a motivation now of
course the next best thing will be I hope that whatever investor that it will
turn out to grow beyond my expectation meaning to over to over-deliver so in
that say so my profit I can’t have not only my capital
I also cash out additional revenue or capital gain photos
equity and perhaps if we structured that then it means that when you go perfect
let’s say for a company that I do have a stake in this company itself all right
so I think that was quite a mouthful so I’m alright so um this would be what
it looks like again this is something that I screenshot from the in net so
this is how normally a private equity if you did if they window structure in
opener into a phone normally is in a fun or trust write a fan of a trust because
this structure is that a unit trust fund whereby you have an independent trustee
the holder money the private equity fund the fund manager only provide the fund
management or investor management to the money that is under the fun which is
governed by the trustee to trustee actually acts on behalf of the investor
right so you don’t give the money the familiar it’s the same I mean the safest
kind of private equity arrangement would be similarly a unit trust arrangement if
a trustee in a fund manager the family charge a fee and the trustee will act on
behalf of the investor – you know if the so in the sent out the fund manager
cannot run away from the matter for money not unlike the scams that you have
her jr. go or some some cafe business or MLM and all that so the structure of it
either and the best of us with is regulated by Security Commission as well
so the private equity fund we actually invest in multiple option investments
core portfolio so normally they imagine a few portfolios so they diversify the
risk and to expose themselves with different kind of projects in different
regions and all that now let’s go to this example of an investment and this
is a real case study I think it opens yeah it’s pretty nice music though so if
you have any question to time the check box I think I have a question from Brian
address it later writin bang your back yep
alright so one example of private equity investment will be something that taken
from this one of the projects that’s running so what this example shows you
is that it combines all of the concepts that we have discussed just now for the
past 45 minutes so one is to say that you can see that this project it’s in
Philippines it’s a place called Freeport Zone so this car Freeport Zone the the
the back story is okay the back story is that in Philippines apparently most of
the lands ok other plots are free whole ok free go and when it comes to a lease
whole land and this developer want to develop this land the land bank for a
logistic and Business Park in class Freeport Zone it’s a nice hole from and
Bank do not know how to proceed because they Bank normally have this trick for
severe I this district what we call as a qualified for severe okay you must meet
this right here a a ABCDE so if you say criteria it on me already so they said
we cannot approve we cannot prove not the the loan so which means that if this
kind of thing happen if you’re the developer you have to find another way
to fund your project and that’s why you look outside and you know the
unconventional way of funding is to look for and doing Nestor ok so imagine if it
comes to it comes to you and you as an investor you do all the do divisions and
you say ok you can funds you can imagine the project but because you cannot get
bang load so when I loan you the money I’m going to be a dialogue launcher Eli
all on charge a bill I alone shut up it wins with enjo ends I so meaning that
the the the interest that I’m charging you it would not be so low as the bang
already because in in some way you already desperate man right that’s why
you come to me so I’m going to charge you an interest rate of necessary 20%
per annum three years term so if you are investor the invest in this project or
this these kind of views or so okay you’re getting 20% per annum right
because this is Oregon negotiated deals so the fund manager of course s to have
the network he has to have the legal tax you know support to actually sort of
kind of deal and to have all the documentation than to do all the due
diligence to say that okay I think this very good very good area it could be
very profitable chasm – said that because at least homeland which isn’t
really nothing of it not really not a big deal so they’re gonna fund this
project and of course you see this loan-to-value 20% meaning that if I’m to
go in I also want to have a three independent valuable appraiser to value
the land where what is the value and what the to value is as such I only
learned you 20% of the value based on the independent valuation so in that
case it protects my risk so even if the land value is to drop that’s a 50% it’s
also more than what I have learned in the first place right so it’s secure
background was first lien charge on the assets okay and the the
other thing about I’m project like this is that if the be
familiar is also not what because a major of the investor meaning that this
is where the moment where HUD mentality a hot mentality is it’s actually good
make sure you follow what people are doing meaning that if you are the
biggest investor then you appear a fragment but you say that okay let’s say
this project who are the other investor bigger than me so in this project it’s
1:00 cuckoo Ayla kuwait mail finality or it’s got a big investor and explore a
big night whether this projects going to go is that see how the relations the
resident worked into this kuwait whale fun and messy the Philippines government
that so essentially you’re actually following to say that well if a big is a
big fun or reputable company or organization you’re investing in or a
big Bangla right investing in then I only invest probably
10% of what am less so I just follow them so again like I say this is where
the hot mint and it is probably good so you see who are the investor so yeah I
mean that would be one of the example okay that covers and updates first
system is a risk management how they manage the risk second is how the
underlying asset what underlying sa and how are the returns are this word
interim will be corrected dividends right what are the method of financing
will requires a senior financing and of course follow the her kind of mentality
okay right okay I think I actually left at one point to to cover for our
audience today is the fact that a lot people never heard of private equity
because just last week I was chatting women on our clients are about these act
and he say that we also have an objection to say that a bike I never
heard of it before why not so I tell him okay so this kind of shit
next layer next layer sales our sales manager sorry I told him I say that okay
if you want to push your nestle products are to to to to the market to your
distributor would it be more prudent will it take less water and easier to
actually talk to Tesco or to talk to ten smoke a tyrant it because it probably
takes you the same amount of sales but the effort of talking to tenkan I don t
know even the catalytic converter one test car is probably more tedious so
that is my power equity when they want to raise capital they are not so
interested yeah I mean most I think most we are not so interested in talking to
what we call its retail investor okay there are more interested to talk to
pension fund EPF probably right all those big fun because this is where they
can do raise really big money and for me to investor if the opportunity arises we
just ride away ok we just ride the wave which is right away and this thing
coming back to here you know I mean it is probably most of
you don’t know Ashton Kutcher as a feature is a very well-known actor for
many English movies right western movies so it’s facing us and you know Aston
Kutcher yeah it’s an actor but he’s also
attacking master so he’s also in front of what we call it’s a great investment
to invest in our primary to to invest in companies like Spotify a B&B Foursquare
you were doing very early days so you see that really good business minded and
really savvy people they are really exploring into private equity as of now
so again you can see that this is all wrists and there’s always we walk when
it comes to private equity right so again see how you look at it danger
with this opportunity right where this danger because we whoops you to enjoy
some people to see opportunity so what are the expectations of return we will
say that very realistically about 15 to 20 percent net denim so to make it in
very simplify terms double your portfolio in about five to six years
right based on the rule of 72 long period to be 2 to 5 years some even 10
years underlying investment it could be in projects financing this is the
example that give in project financing is a project so it’s not company these
are projects right project financing real estate development in a in a trust
kind of form started with niche markets so what we recommend actually people to
invest is not the so-called private equity or hedge fund that involves
forest trading that in most option in most commodity because this I really
placing your bets right but we don’t do back against this kind of trend minimum
investment it could be it could be 50k it could be hundred k kharon and ended
and some options available under k feeding into primary tranche meaning
that this private equity funds I think in Malaysia is still very very new when
opportunity available normally they come from Singapore and all those funds are
actually funds or projects or arrangements in Singapore
whereby the minimum everything in single dollar or US dollar okay so when it
comes to Malaysia they actually say that same amount but they say in Malaysian
Ringgit so again the mini the the the the I say the cons will be moderate
really high to high hurdle of entry in terms of capital depending on how many
you want to allocate your investable about
to allocate into these pockets if 100k is all that you have I say that you
really have to reevaluate your your options whether you meet these hundred
care cash for emergency or not okay and of course private equity are closed and
they are not available the time only as and when the pros of this probability of
course would be the main one would be they’re not call me little market cycle
so market up you can make money maybe not as much at the market some people
say I can make stock market 30% per year when the market is bullish I think yes
but it’s likely to swing down the other direction too so it’s a diversification
right it’s a teaser it’s a inform diversification not market
up you can make money market down still can make money but when market up you
can reach money ah everybody’s making money right fair
comment so yeah I mean that would be all for for me for today I got one more site
but let’s go to Q&A if there’s any see yeah I think a pretty much answer the
question as well here a brian is a– is asking about how do we write we do
investor can involve in this kind of private equity fund so you say that the
minimum is a hundred thousand right and just when it is available so so we gotta
have i have to cut it on this marketers this thing i think i think only the
financial planners are carrying this product
yeah actually this private equity they have a few ways of teaching conventional
distribution channel and these are normally they don’t they don’t employ
agent so it’s not a unit trust agent you have a chance to know this normally they
are available through banks okay – thanks
why available through banks is also because men have their own client base
in private banking either in private banking I guess you will encounter this
as one of the option besides fancy take light or currency as well
that so if you’re not maybe you’re in premium on you know normal banking they
probably don’t even want to present this to you okay but in private banking I
take they get exposed to a lot of this opportunity again this private equity
you have to be very careful you cannot say that okay I encounter privately then
I address no it’s because you do not know what the underlying asset and
whether you are getting the short end of the stick
now these private equity firms normally they are not there available to banks
not because of any other five major it is normally a private equity firm
that has the people network and the professional or the people and the
professional expertise to do this they form a firm and then and then what
happened is they they they do a joint venture with banks because first is they
know benefited in the network and because second when it goes under a pen
it becomes more credible right especially if you are talking about
major banks or international banks so when you go to pen is more credible and
it also for us we think that is also more secure for investor I’m not saying
you cannot lose your money I’m not saying I’m talking about on the
regulatory standpoint because you know that for private equity firm to go to
drama to repair the Penguins have to their own level of due diligence agree
if not I mean you are actually spoiling my reputation man so the penguin we have
to another level of due diligence so then again only then it will be
available for the customers that so for us for independent advisors like us we
also have access because kind ask for it and you know because you’re independent
you also can go to a level where we can take these private banking level our
equity things for our clients so yes it will be normally available to banks but
things I would say that depending on your banking level they may charge you
higher for for us if already a client’s there
normally be charged for this advisory or even for the charges for initial charges
it’s a bit lower than that would say okay good question
okay yes I guess so I now we have Clarice is asking about the return right
now you say like off about 15 to 20 percent return a year like easy is the
investors with a mistake acting that return every year or is it like only
upon exit then you get all the money back upon exit actually a fun taxi so
you don’t know anything until the panel over right yeah so what we call upon
exceed but actually if you get let’s say is double up your money right then you
just analyze in essence fires exit and you double up your money so say when you
about 80 percent right that is excluding whatever the mittens right whatever
dividends that is a being payout and I use the term dividend lucy here because
they are not like even for public company those division come from the the
deals that those projects or company pay the interest okay the interest of the
family and the family i have to peel back this these interest as a profit to
the investor for in the interim period okay so this crease upon exit and okay
are this is a sensitive question or quiz is wanting to know that for for those
like banker and financial planner like you carrying this product can you
disclose the sales commission i would say that it could range anything from 3
to 5 3 to 5 percent so is more getting less like a unit trust right yeah that’s
right okay awesome and so just now where you mentioned about
that fund funding the project in Philip pain become like using the the senior
financing senior loan clapping for arrangement so that it must be already
over right yeah I saw that it’s license yeah yeah yeah is that is already over
so it’s already over anymore but you still have yes you still have more
coming yeah you know yeah that is that’s what I what you’re seeing here is that
it is another option which is why just launched again I’m not a dispro who what
funds but the closed-end fund and it is also distribute my major bang if you
have access to that information for more detail of course you have to go to
kitchen area copy the link for yeah III piston them
to all the audience ooh yeah I got it normally I own it this probably via a
one to one presentation so on a public site because we are independent we don’t
want to be seem to represent any financial institution for that matter so
again one of the things that I presented here is to present how those projects
are managed okay so it’s by the same thing let’s say there is a very same
team in Iraq by the same committee by the same son manager so normally how
this works is that they raise capital first and only conquering it they’re
evaluating views that come to them okay so it could take about what six to one
year before they really before whatever to raise the capital we are fully
invested okay so it normally works like that so this is what we call as a
historical how how they do things but when I say that what available now is
its opening again for subscription it is by the same committee it’s like part 1
and part 2 and part 3 okay so this is more like a cartoon now they’re raising
that again so and if they’re some favorite cartoon show because if you a
privately different have notes I record I’m not
so not comfortable to actually present to you to to you even if you are very
kid so if some Parrikar to show we say that okay this could be something that
is viable okay something that is available by not having a few major
bangz okay depending on your access to those info know again some banks don’t
disclose it because this this carry the title of a competitive and so the for us
we are anything so yep okay and a limit only here want to know about during the
interim like how much the dividend payout things like that so I think it
depends on the funnel investing in right is this spell inspectors is it it
depends I can give you if I even say after three five three to five percent
per year but again these are historical right historical this is historical
meaning that there’s no there’s a trend in terms of how them the fund manager
conducts the deals but there is no historical things to say that let’s say
a company like a public bank it pays what six six seven percent dividends and
the business is doing good so you can forecast it’s going to pay increasingly
multimeter as the other group goes by so again it doesn’t work that way so that
is why really I cannot give you a forecast of how much the mittens it has
again when we come to the mitten is something that s and when I always have
this SN when SN when so take it as a bonus yeah yeah and TP you want to know
is there like any endo report by the by the companies that are investing in
let’s say you’re investing through this private equity fund that is investing in
certain companies so that’s a sudden other companies released a report to the
fund managers and we a semester do it right that’s right right a fund manager
we actually filled out this details like annual report if you are referring to
any public companies but on a detail and I know Lee polikov
Panisse that would not be available again if primarily there are a few types
one is the type where they raise the capital that they invest in a few
projects or few opportunity the other type of in the only investment project
like a real estate development trust at that kind of thing you have access to
the very detailed information on how things are going the facts and figures
but for and this type a way by they they they have a collective investment fund
and they invest in the few companies normally a master do not have access to
the very detail of the figure of each companies become one thing they disclose
is to destroy what is the progress how the projects are the way but most of the
time even for this option they don’t even disclose what are the name of the
company itself not even to our level because they have structured in a sense
that they say only Casa mv8 non-disclosure agreement with the fund
manager and this company where they have found me again it works you can see or
it’s not transparent enough I think you have a fair point but imagine if
everything is public then public is already a public equity right so
everything available and everything is proper everyone knows about that already
competition to come in you can really structure such a good deal anymore so I
would say it’s a double-edged sword double-edged sword of the answer is okay
okay good and and also as you know when we invest in any unit trust funds they
they will have like interim report stuff like that so for this permit you could
have fun do they provide that as well like they have a say like a theory or
yearly oh yes historical is half yearly yes they do
provide directly investor not to the public but if your investor then they do
and then how is it like structure you know
when just now you show a chart read ownership is limited partnership where
big boys like the pension funds and all the higher because they have your name
as a one or a partner of the firm LCL polc for my so for us like we take
Messer so we are like represented by the by the but probably could even know your
are you you you actually represented by yourself to so unhappy inside that’s
right no no proxy nothing no proxy you will have a cow again different
different structure this is just a general structure the one that you have
here is in the form of a funny so it is like investing you need trust fund will
open a cow then you see on it there no proxy or no nominee require let’s see
like like your slide 15 the examples about yeah it’s not the deal in
Philippine yes one is like they require 10 million so if you invest like minimum
hundred thousand then what you need is actually I guess like 100 investors as
if I yeah yeah yeah if you say our retail yeah that’s right so you so the
company structure of forming that limited liability partnership is yes is
still okay right okay okay probably I guess this a a general snapshot or is a
presentation it is ignore so there’s no incorporation of any companies or so is
required it just like the one of the option the currently open here is is
actually very simple it’s as if you’re opening an account if you need trust
company a platform so your name is there so you get channel money in and it will
be in that fun I would say in a in that fun and you can so there be like
management fees charged and all yeah yes that will be the family just to hi
about normally about two to three percent every year normally yes that is
right so you have to deduct these are so deduct this from your return fifteen to
twenty percent again it’s already next what we say so anyway they spell out the
exit plan by let’s say after five years then have to be resolved in good so what
you have the visibility is at this level right not at this level okay for retail
investor so you have recipes on this level and they even you don’t want to
cash out they also want you to catch up because it’s a quarter minute that they
are closing that okay so open for let’s say for limited time so the one that we
have is open probably until end of November or mean of November because
they say that they open up this time frame or uncute erase a certain target
capital which ever comes first so they might close early right so when the
clothes then that’s it I mean no investment you don’t take any person
anymore and spell out and if you look for let’s say five years the fires and
whatever directly into the bank account it’s not really master now where every
spare it’s not my unit trust it is not really master so it will be like you’re
getting a cash go catch this one you know from Fannie Mae yeah and this is
what has been historically ERP let’s get to the very last questions we have a
really good question from Vinson here he wants to know that how do we justify
that a private equity fund is uh good to invest like any criteria you can give us
say you know any management team or the potential of the business or the things
like that so what is the criteria that you can give us a guideline I would say
they’d be I would say track record because when it got very important
because technically reflects the person behind it and if the track record is no
good I think that that kind of spin wonder about the person behind so I
don’t even want to talk about the return because I believe always believe that
the return the return of capital is more important than the return on capital
I think that you don’t fall into a scam alright so historical requite very
important to record the second I think probably this is the second thing but
the first thing is whether its regulated or not regulated ah yeah then question
asking about regulation like okay if it is regulated and what I have a regulator
regulated meaning that if you had a prospective prospectus approve okay
hey by SC that is regulated ah okay regulator doesn’t mean can almost money
regulated meaning that is not scale money game or things like that
thank you and if you go to banks if they let you access to these banks are also
distributing it right so it’s not something hanky-panky a company or what
No so this primarily they do talk it is disputed Philip banks but the banks the
actual management is done by a joint venture equity fund basic Singapore so
it is actually available via Singapore and Malaysian backs okay
so tribal tax treatment by hover text treatment like to the profit you made is
it like depending on the country of projects or things like that
oh no now if it is already in the form of fun in Malaysia so it would be
treated as in Malaysian tax law so whatever
what we call as a capital gains then it’s not accessible so it would be not
be the text would not be evaluate at this level it is available at this level
right yeah so it would not it would not by the time you get that money is is
considered capital gain or after text already right yeah okay yeah awesome so
I guess this is really an eye-opener for most of us here to understand about this
private equity and if you want to know the late this private equity fund that
is available and where my friend here is Chang Fuu is distributing that fun then
you have to engage on one-on-one face-to-face meeting with him so just go
to the link I did add that I just posed to you maybe we can open up that link
right yeah this mainly in the phone it’s it’s actually in a in a blog post it’s
actually a block oh yeah so you go to my website it’s actually
this so it is a Google Form that actually that says big hearing yes it’s
already embedded so again you can speak for more details over here you know this
article by itself but at the below that would be you know it’s I think it is
this showing on your side Casey so maybe you can just yeah I mean I mean yeah
what gets to make various talk okay can you let the Google phone directly also the link that you send to me is
actually going to your babu’s is it yeah yeah it’s a supposed yeah he’s
going to your Papa’s and yeah but I’m not sure I supposed to have a form over
here I guess I see the phone this is a request yeah it’s only my site
it’s only my site it’s having some error so yeah Mabel problem install some flaw
in that block so I’m sure my screen over here yep that’s good the people what a
recording I’ll be seeing this right okay so it’s one on one but it might be one
one on man the arrangement is normally also to a
conference now if your honor do you do you know when is the due date for this
particular fund that you I would say and 45 days from now that’s right
okay awesome so uh thank you very much thank you
if you couldn’t look the forum or anything on on that page just I think
this email you directly can you go find me yeah yep you can go
to this website how to finance money talk then you’ll be able to connect to
him so thank you very much for attending and we’ll see you again in the next case
allows money tips shows yeah we have a very vibrant crowd today so thanks all
you for your presentation here and uh thanks for taking Ramos understanding
about this privately pretty fun so you are it to you bye bye bye bye thank you
bye bye

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