This article first appeared in The Edge Malaysia Weekly on November 4, 2024 - November 10, 2024

Last Tuesday, the Ministry of Finance (MoF) revealed that Khazanah Nasional Bhd and Permodalan Nasional Bhd (PNB) had lost a combined RM43.9 million from the sale of their minority stakes in FashionValet.

In 2018, Khazanah invested RM27 million while PNB put in RM20 million for the stakes in FashionValet, a homegrown online retailer and e-commerce platform. However, they exited the loss-making business for RM3.1 million.

Both Khazanah and PNB have since defended the investment, stating that FashionValet was affected by the Covid-19 pandemic.

PNB says, “We regret the loss incurred which amounted to RM18.7 million after sale proceeds received of RM1.3 million, but they should be viewed relative to RM337 billion in investment assets managed by PNB and the RM16.4 billion in investment income generated after accounting for this loss in FY2023.”

Khazanah says, “At the time, the company (FashionValet) was a promising homegrown e-commerce fashion platform with more than 400 brands and 15,000 products on its platform and expecting revenue growth of [about] 60% annually. Our investment rationale was anchored on the theme of Offline-to-Online e-commerce, as well as a commitment to support Malaysian entrepreneurs and promising early-stage companies.”

The filings to the Companies Commission of Malaysia show that FashionValet had been bleeding in the past five years. The fashion retailer already had RM54.2 million of accumulated losses in 2018, the year the two parties invested in it. The amount ballooned to RM127.5 million at end-2022.

While the MoF, Khazanah and PNB have tried to minimise the bad optics, the entire episode leaves a bad taste in the mouth.

Datuk Fadzaruddin Shah Anuar and Datin Vivy Yusof, who founded and managed FashionValet, have announced their resignation from all their posts in the company to take full responsibility for the failure.

Are the resignations good enough as accountability for the failure? Many are curious about the salaries that the married couple had drawn over the years.

FashionValet may have inspired many bumiputera entrepreneurs for the fact that it was able to attract investment from both PNB and Khazanah, and not just one of them. FashionValet is certainly not the first failed investment that PNB and Khazanah have made, and it is also unlikely to be the last.

The investment sums and losses are just a drop in the ocean compared with the sheer size of the investment portfolios held by PNB and Khazanah. Still, the two have a duty to safeguard every sen in hand and to separate the wheat from the chaff.

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