This article first appeared in The Edge Malaysia Weekly on August 5, 2024 - August 11, 2024

Despite having to deal with multiple challenges over the last few years — from the Covid-19 pandemic to aggressive interest rate hikes — private equity investor OSK Ventures International Bhd (KL:OSKVI) has continued investing in new companies and, to its credit, performed commendably.

The ACE Market-listed group provides private equity capital to companies ranging from commercialised start-ups to late-stage growth companies seeking expansion capital.

In the last financial year ended Dec 31, 2023 (FY2023), it added five investments to its private portfolio while successfully exiting one, bringing the total number of companies in its private investment portfolio to 37, compared with 33 in FY2022 and 28 in FY2021.

OSK Ventures’ earnings over the last three years have been laudable. Its net profit in FY2021 shot up to RM29.14 million — its highest in four years — thanks to a significant fair valuation gain that was driven by its private investment portfolio. This was after it recorded a small net profit of RM3.94 million in FY2020, the year the pandemic struck.

Its net profit then fell to RM19 million in FY2022 amid challenging market conditions, before growing to RM23.94 million in FY2023, helped by an upward valuation of the private portfolio.

As for return on equity (ROE), this stood at a strong 14.7% in FY2021 but then eased to 8.6% in FY2022 before moving up to 10% in FY2023. Its weighted ROE over the three-year period stood at 10.5%.

Its solid earnings and ROE performance over FY2021-FY2023 make OSK Ventures our winner in two categories in the financial services sector: Highest Growth in Profit After Tax Over Three Years and Highest Return On Equity Over Three Years. This is the second straight year that it has won on the ROE front.

It declared a gross dividend of two sen per share in each of those three years.

As at end-2023, OSK Ventures’ private investment portfolio was valued at RM254.1 million, up 15% year on year.

In FY2023, the new companies that OSK Ventures invested in were Accendo (a provider of a talent intelligence platform for organisations); Almazing (a provider of retail analytics solutions for shopping malls); Project Oren (a shariah-compliant gold trading platform); Bondlinc (a fixed-income product trading and wealth management platform); and Affable (an influencer marketing platform). It sold Affable within the same year.

Moving forward, OSK Ventures has indicated that digitalisation and sustainability will be major priorities on its strategic agenda.

“We recognise the transformative power of digital technologies in reshaping industries and driving growth opportunities. As such, you can expect us to prioritise new investments in companies that are leveraging digital solutions to enhance operational efficiency, optimise processes, and unlock new value propositions,” its CEO Amelia Ong Yee Min says in the company’s 2023 annual report released in March.

OSK Venture’s non-executive chairman Tan Sri Ong Leong Huat, who is Amelia’s father, is its founder and largest shareholder with 66.09% interest. He is also a director of RHB Bank Bhd (KL:RHBBANK).

The group is now looking to broaden its product offerings with the launch of new funds across various asset classes within the private markets industry.

In 1QFY2024, its net profit rose 20.6% y-o-y to RM5.18 million, mainly due to an upward valuation of its private portfolio.

OSK Ventures plans to focus more of its attention on the ESG (environment, social and governance) performance of the companies it invests in. Its 37 investee companies as at end-2023 were spread across Malaysia (12), Singapore (21), the Cayman Islands (3) and the UK (1). Most of the companies were either in enterprise technology (14) or financial services technology (12).

Last December, OSK Ventures — through its wholly-owned OSK Capital Partners Sdn Bhd — acquired Singaporean firm Digital Growth Ventures Pte Ltd (DGV) for about RM2.3 million. DGV’s main activity is investing in fintech start-up companies.

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's App Store and Android's Google Play.