This article first appeared in The Edge Malaysia Weekly on October 25, 2021 - October 31, 2021

PERMODALAN Nasional Bhd (PNB), one of the country’s largest fund management companies with assets under management exceeding RM300 billion, is set to join the highly valued technology start-up game as an investor via the latest investment round by Southeast Asian online automotive marketplace Carro, according to people with knowledge of the matter.

Sources say PNB is in advanced stages of discussions to lead the Singapore-based company’s multimillion-dollar funding round, which may see participation by prominent investors such as Singapore’s Temasek Holdings. Carro is also seeking investment from Malaysian listed firms.

The Edge understands that this fundraising round is an extension of a US$360 million (RM1.5 billion) Series C fundraising exercise led by SoftBank Vision Fund 2 in June. Among the notable investors in the previous round of financing were Indonesia-based funds EV Growth, Provident Growth and Indies Capital.

Sources say the potential investment will be PNB’s first in the mobility space and will allow it to gain exposure to the region’s fast-growing mobility industry.

The round has not closed, so the terms may change. When contacted to confirm PNB’s participation and the fund size to be raised, Carro co-founder and CEO Aaron Tan told The Edge: “As the round is coming together, we are reserving our comments till further. Stay tuned.”

Carro’s Series C funding round in June raised US$360 million, putting the start-up’s valuation at more than US$1 billion and making it the first auto marketplace in Southeast Asia to achieve unicorn status in five years.

According to reports, Carro plans to use the funds to strengthen its businesses in Indonesia, Thailand, Malaysia and Singapore. The company will also use the capital to expand its financial services and enhance its artificial intelligence capabilities.

Reuters reported Tan as saying that Carro was preparing for a US public listing that could take place in the next 18 to 24 months.

As at June, the company had reportedly raised more than US$400 million in investments. Its previous investors include the Singapore government’s investment arm EDB Investments, telecom giant Singapore Telecommunications Ltd, Japan’s Mitsubishi Corp and Singapore-based venture capital firm Golden Gate Ventures.

Founded in 2015 by Tan and two of his university mates, Carro allows customers and wholesale businesses to buy and sell cars using a pricing algorithm that locates the best deals. It also offers insurance and financial services such as loans for second-hand cars. In 2019, Carro invested US$30 million in Malaysia-based car bidding platform myTukar as part of its regional expansion.

The compamy booked revenues of US$300 million for the year ended March 2021 and has registered positive earnings before interest, taxes, depreciation and amortisation for two years.

Talk of PNB’s investment comes at a time when a range of start-ups in the region are beginning to launch new rounds of funding to expand their businesses, and are trying to attract Malaysian funds and companies to participate.

Last month, Sime Darby Bhd participated in Malaysia-based car-sharing platform SoCar Mobility Malaysia Sdn Bhd’s US$55 million funding round, along with South Korean private equity firm EastBridge Partners, as the diversified group looks to grow in the mobility space.

The funding round took SoCar’s financing tally to date to US$73 million and valued SoCar Malaysia at around US$213 million.

SoCar Malaysia was established in 2017 as a joint venture between South Korea’s SK Inc and SoCar, regarded as the first Korean car-sharing business to venture abroad. Since January 2018, the company has been providing car-sharing services in Malaysia and now accounts for a 90% market share with over one million users, according to reports.

Following its foray into Malaysia, the car-sharing platform also entered Indonesia in December 2020.

Grab, the largest ride-hailing and food delivery firm in Southeast Asia, also announced in April that it would go public through a special-purpose acquisition company merger valued at US$40 billion, which is expected to be completed by the fourth quarter of this year.

Meanwhile, Carsome, the Malaysia-based used car platform that competes head to head with Carro in the same markets, became the first Malaysia-based tech unicorn after acquiring 19.9% of Australia-listed iCar Asia Ltd from Catcha Group in July. It is also reported to be mulling a public listing, possibly within the next 12 months.

PNB is not the only Malaysian government-linked investment company that has entered the tech start-up space. Over the years, sovereign wealth fund Khazanah Nasional Bhd has invested in various start-ups including Palantir Technologies, Alibaba Group Holding Ltd, Cainiao Logistics, SkyScanner, Garena, Blippar and 500 Startups — some of which have paid off when they went public, such as Alibaba in 2014.

In January 2016, Khazanah via its special-purpose vehicle, Bukit Galla Investments Ltd, invested in WeLab, one of China’s largest mobile lending and credit analytics platforms, in a US$160 million fundraising exercise. Khazanah led a consortium of investors that included ING Bank and Guangdong Financial Technology Group. The investment represented Khazanah’s first in China’s financial technology sector.

In 2016, Kumpulan Wang Persaraan (Diperbadankan) reportedly invested US$30 million in e-hailing company Uber Technologies Inc, followed by another US$40 million in both DAG Ventures and Vickers Venture Partners in 2017.

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