Finance Minister II Datuk Seri Amir Hamzah Azizan told the Dewan Rakyat on Thursday (Nov 14) that the FashionValet Sdn Bhd issue would not stop Khazanah Nasional from continuing to invest in start-ups and supporting the growth of the venture capital market.
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NewsTranscript
00:00Fashion Valley has recorded a positive return on investment, or more commonly known as EBITDA,
00:06for several years after receiving investment from Kazanah and PNB.
00:11However, Kazanah and PNB are aware of the challenges faced by Fashion Valley to expand business.
00:20The failure of Fashion Valley can be linked to external factors such as the following.
00:27First, the implication of COVID-19.
00:30When Fashion Valley wanted to become an expressive platform for purchasing various goods,
00:36it has increased the number of physical shops significantly.
00:40However, the movement control order implemented during COVID-19 has prevented the business of the physical Fashion Valley
00:48and resulted in the market and the use of premiums, including caps, to deteriorate rapidly.
00:56In fact, the lack of physical shops also had to be closed.
01:00Second, the change in the trend of the e-commerce platform.
01:04The rapid development of local fashion brands, especially Sopan Fashion,
01:10which uses its own e-commerce platform and alternative channels such as AXS and Frakesbook,
01:17has caused Fashion Valley to experience great competition.
01:22Therefore, the Fashion Valley platform was forced to be closed
01:25and then Fashion Valley has shifted its focus to its own brands such as Duck and Lilith.
01:32Third, the challenge of fundraising.
01:34All these challenges have caused a lack of cash flow to Fashion Valley.
01:39It is trying to raise new funds to deal with this problem,
01:44but the existing shareholders, including Kazanah and PNB,
01:48do not agree to take additional risks by adding investments in Fashion Valley.
01:53In fact, the fundraising market that challenged us at that time
01:58caused the fundraising process carried out by Fashion Valley to fail.
02:03Although Kazanah and PNB are minority investors,
02:07both parties have played a proactive role in helping Fashion Valley.
02:11This means providing strategic guidance and financial advice to the top executives of the company.
02:17However, the impact and challenges faced by Fashion Valley are too great
02:23and make the financial situation worse.
02:27To continue to operate and deal with the cash flow problem,
02:31Fashion Valley at that time needed to raise funds from new investors immediately.
02:37However, they did not accept many offers from new investors.
02:41The offer received was the best offer and was approved by all shareholders.
02:47Kazanah and PNB admitted that the results of the investment were not consistent with the return of the investment in Fashion Valley.
02:56However, the government will continue to pay attention to ensure that the status quo continues to be strong.
03:06Given that the SPRM is still investigating this case and the in-depth audit is still underway,
03:12Kazanah and PNB need to be given space for the investigation process to be completed.
03:17All the earnings will be used to improve the management and management procedures.
03:25That's all. Thank you.
03:28Given what has happened to the investment in Fashion Valley,
03:34will Kazanah invest in the startup company or is there a different strategy in the industry?
03:42Is this a sign of Kazanah's desire to invest in the Teroka model? Thank you.
03:51Kazanah's investment in Fashion Valley was made seven years ago.
03:56Since then, Kazanah's approach in making investment decisions has been challenged
04:02and the investment selection process has also been tightened, including investment in the startup company and Teroka capital.
04:10The issue of Fashion Valley will not allow Kazanah to invest in the startup company.
04:17The vision remains in the hands of Kazanah and Kazanah will continue to support the startup ecosystem and Teroka capital
04:26while improving the control mechanism.
04:29It is reasonable for Kazanah to continue to invest in the Teroka capital ecosystem
04:34in line with the economic mandate of the city to support the development of the country as a whole.
04:40That's all. Thank you.
04:46Transcription by ESO. Translation by —