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MDV as an Innovative Technology Financier - Presented at: Moving Forward – Enabling the Growth of ICT in
Malaysia
20th June 2012
Contents
CONTENTS
2
Section 1
MDV’s Processes and ProductsSection 2
Background on MDV
MDV Success StoriesSection 3
Pre-amble Impact of MDV Programs
3
MDV’s Achievements
The total value of business facilitated by MDV via its programs is estimated at close to RM15 billion
MDV has financed 300 ICT/Biotech companies, of which approx. 72% were SMEs
MDV disbursed RM6.25 billion in financing for projects that have employed approx. 15,000 workers, with fund velocity of 3.7 times,
MDV financed key government e-Infrastructure, such as ePerolehan, eTanah, eCourts, eSecurity systems, and Defense systems
Contents
CONTENTS
4
Section 1
MDV’s Processes and ProductsSection 2
Background on MDV
MDV Success StoriesSection 3
Pre-amble Impact of MDV Programs
5
About MDV
Wholly owned by the Minister of Finance Inc, Malaysia;
Started operations in 2003 with initial funding from JBIC, Japan dedicated for ICT;
Total fund size of RM 4 billion to finance ICT, biotechnology and Green energy projects;
First-ever Lending Program in Asia developed specifically to drive the ICT, biotechnology and green energy;
Dual Role – Innovative Financier and Development Facilitator for ICT, biotechnology and green energy sector;
Value chain approach in financing and developing the industry.
Initial Paid-up Capital RM50 million, increased to RM100 million in 2007 and again to RM250 million in 2010.
BACKGROUND
Section 1
6
Funding Sources and Lending Direction
RM1.5 Billion Islamic Medium Term Notes (iMTN)
MDV Second Fund
ICT Sector
Biotech Sector
RM1.6 Billion Term Loan from JBIC
MDV First Fund
ICT Sector
MOF had approved RM2.5 billion for MDV Second Fund of which RM1.0 billion has been drawn.
Green/Clean Sector
Section 1
7
MDV ‘s Technology Focus
INFORMATION & COMMUNICATION
TECHNOLOGYBIOTECHNOLOGY GREEN
TECHNOLOGY
Technologies for gathering, storing, retrieving,
processing, analysing, and transmitting information
Use of living organisms or biological techniques to
provide chemicals, drugs, food and services
Products and services that (1) provide superior
performance competitively, (2) reduce or eliminate negative environmental impacts and (3) improve
productive and sustainable use of resources
2002 2008 2011
Section 1
8
When MDV can finance
Se
t Up
(In
itia
tion
Sta
ge)
Exp
an
sio
n S
tag
e
MDV(Loans)
Banks(Loans)
Incubator(Equity)
Venture Capital(Equity)
Grants
Commercialisation
Section 1
9
NationBuilding
ProfitMaximisation
Business Objectives
LowRisk
HighRisk
R
isk
Por
tfol
ioHigh Risk
Nation BuildingHigh Risk
High Returns
Low RiskNation Building
Low RiskHigh Returns
MDV in the Financing Ecosystem
VentureCapital
CommercialBanks
Development FIs
DevelopmentAgencies
Section 1
10
MDV Processes
Pre-Assessment& Support
Pre-Due Diligence& Due Diligence
Decision DocumentationFirst Drawdown & Disbursement
Issuance of Letter of Offer DisbursementSubmission of
Application
Fulfillment of CP &Execution of
Security Documents
Discussion & Application Support Approval
Assessment & Evaluation
Facilities Agreement & Security Documents
Section 1
Time taken to process (application to decision letter):
Standard Financing 30 working days
Small Contract/Project financing
Special Programs
14 – 21 working days
7 - 14 working days
Contents
CONTENTS
11
Section 1
MDV’s Processes and ProductsSection 2
Background on MDV
MDV Success StoriesSection 3
Pre-amble Impact of MDV Programs
12
Minister of Finance, Inc.
Malaysia Debt Ventures
Berhad
99.9%
Authorised Capital: RM500 millionIssued and Paid-Up: RM250 million
BOARD COMMITTEES:
Board Financing Committee
Board Investment Committee
Board Risk Management Committee
Board Audit Committee
Board Procurement Committee
Board Remuneration and Audit Committee
BOARD OF DIRECTORS
Md Zubir Ansori YahayaMD/CEO
Risk & Credit Mgmt
Internal Audit
Federal Land Commission
1 share
Business & Corp Services BTA
Finance & Admin
Human Resource
Corporate and Organization Structure
Legal & Sec. Asset Mgmt
Section 2
13
Our Criteria
•Public or private limited company incorporated in Malaysia
•Minimum paid-up share capital of RM100,000
•Minimum five (5) employees
•No restriction on foreign shareholding
•With ICT/Biotech/ Green/Clean Tech contracts (local & foreign)
Eligibility Criteria
•Loan Size - financing up to 85% of contract value or total project cost, with loan size up to RM120 million
•Loan Tenure - Repayment period between 1, 5, 10 years
•Loan Repayment - Flexible repayment terms that are aligned to the cash flow of your project
•Collateral - Do NOT necessarily require hard and cash collaterals
•Equity Structure - NO specific requirement
ApplicationCriteria
•Management Risk
•Technical Risk
•Financial Risk
•Legal Risk•Collateral
Risk •Performa
nce Risk
EvaluationCriteria
Section 2
14
What MDV Currently Offers
•MDV Revolving Project Loans are structured to finance implementation of contract-backed projects to deliver ICT, Biotech and Green Tech as well as high-growth solutions.
•Up to 85% of the value of the contract, or total cost of project, can be financed.
•Loan sizes from RM2 million up to RM50 million can be considered, with repayment periods of between up to 5 years (ICT) and 10 years (Biotechnology/GreenTech)
REVOLVING PROJECT LOANS
•MDV Open-ended Project Loans are structured to finance exceptional open-ended (i.e. non contract-backed) projects, where likelihood of achieving project success and profitability is high.
•Include Build-Own-Operate (BOO) Build-Operate-Transfer (BOT), Concession etc
OPEN-ENDED PROJECT LOANS
•MDV Partner Bank Facilities involve provision of guarantee (bank/ performance etc. and trade facilities (letters of credit) by Partner Banks, fully backed against MDV's guarantees.
•These facilities complement the Project Loans provided directly by MDV.
PARTNER BANK FACILITIES
•Loan sizes from RM250,000 up to RM2 million can be considered, depending on risk profile, with repayment periods of up to five years
•MDV Small Contract/ Project Financing is designed and customized for companies with ICT, Biotech and GreenTech contracts/projects from Government, MNCs, etc or have a commercialized product serving a ready market.
•Approval within 14 to 21 days
•Financing up to 85% of contract value
•Fixed interest rate of between 6 to 8% p.a. on daily rest and flexible repayment
SMALL CONTRACT FINANCING
Section 2
15
How MDV Finances Contracts
CustomerPROJECT/
CONTRACTSPONSOR
Project Deliverable
1
2
3
4
2Financing of total project cost up to 85% of Contract value
5
6
3 Customer completes and delivers ICT project/contract
1Sponsor awards contract/project to Customer; Contract Proceeds is assigned to MDV 4
Project/Contract Sponsor remits Contract Payment as Loan Repayment
5 Customer receives partial contract payment
6Customer receives balance contract payment when loan repaid
Section 2
16
MDV-MSC Malaysia ICT Adoption ProgramSection 2
17
Financing Tracks
FINANCINGTRACKS
Customer Financing Vendor Financing
MDV will finance the customers of MDV’s pre-identified panel of ICT service/ product providers (viz. MSC Companies identified in collaboration with MDEC); and Vendor Financing
MDV will extend working capital financing to the pre-identified panel of ICT service/ product providers identified in collaboration with MDEC
Section 2
18
SME Eligibility
•An SME incorporated under the Companies Act 1965 in the eligible sectors (TRACK 1 ONLY)
Sdn Bhd
•Pre-identified panel of ICT service/ product providers identified in collaboration with MDEC
Selected MSC Companies
•For Eligible SMEs to procure, install and/or commission products and services of eligible IT systems
Procure IT Systems
•SME definition as per National SME Development Council;R M100,000 minimum share capital; minimum of five (5) full-time employees; 51 % Malaysian shareholding
Company Requirements
•Minimum of three (3) years operating track record; growth in turnover and profitability in past 3 years; positive NTA in 3 years
Financial Requirements
•Fixed charge on assets financed; Debentures; Corporate and Directors guarantee; Assignment of medium/long-term contract proceeds
Collateral Requirement
Section 2
19
Vendor Financing Option for MSC Malaysia Status Companies
Customer
MDV provides financing for purchase of MSC Malaysia status company products/
services by customer
MSC Malaysia status company sells products services to customers on cash basis
Customer purchases products/ services from MSC
Malaysia status company on cash basis (financed by
MDV)
Customer repays financing to MDV on deferred basis
with interest/ profit
Section 2
20
What MDV Currently Offers
•A special financing scheme in collaboration with Telekom Malaysia for its HSBB vendors
•Loan size from RM250,000 to RM5 million
•Approval within 7 days
•Financing up to 85% of contract value and a financing period of up 5 years.
•Profit rate of 6.75% per annum, on daily basis and flexible repayment periods
SPECIAL PROJECT FINANCING PROGRAMS
TM JKH VENDOR FINANCING
•A special financing scheme extended to companies that have secured government ICT/ ICT related/ BioTech or Green Tech projects
•Loan Size up to RM5million
•Approval within 14 days
•Financing up to 85% of contract value and a financing period of up 3 years.
•Profit rate of 6.75% per annum, on daily basis and flexible repayment periods
SPECIAL PROJECT FINANCING PROGRAMSGOVERNMENT DIRECT
CONTRACT
Section 2
21
What MDV Currently Offers
•A special financing scheme to promote Bumiputera uptake in the industry.
•In collaboration with MOSTI and Biotech Corp
•Total Loan Size : RM20million (as at 31st July, MDV approved RM18.35mil)
•Loan size up to RM5 million
•Financing up to 85% of contract value and a financing period of up 5 years.
•Profit rate of 3% per annum, on daily basis and flexible repayment periods
SPECIAL PROJECT FINANCING PROGRAMS
BUMIPUTERA BIOTECHNOLOGY & BIO-
INDUSTRY DEVELOPMENT FUND
(B3DF)
•A special financing scheme extended to early stage and/or pre-commercialise companies
•In collaboration with MOF Inc.
•Total Loan Size : RM12 million (2011) and RM28 million (2012)
•Loan size up to RM2 (Venture Project Line) and up to 5 million (Asset Project Line, Working Capital Project Line and Contract Project Line/Small Contract Project Line
•Financing up to 85% of contract value and a financing period of up 5 years.
•Profit rate of between 6 to 8% per annum, on daily basis and flexible repayment periods
SPECIAL PROJECT FINANCING PROGRAMS
RMK10 PRE-COMMERCIALISATION
FINANCING
Section 2
22
Differences with Banks
BANKS
Rates – Risk Based Variable Rates - COF or BLR based Collateral
- Hard Collaterals (All)- Soft Collaterals - CGC Guarantees
DD based on 5 Cs of Credit- Character- Capital- Capacity- Collateral- Conditions
Sectoral exposure- Matured sectors
Source of Funds - Deposits
Payment terms - Accrual interest- Scheduled payment
Fees & Charges- Profit motive
MDV
Rates – Risk Based Fixed Interest Rates (7% to 8.5% p.a.) Collateral
- Hard Collaterals (Selective)- Soft Collaterals
DD based on 5 key areas- Management- Technical- Legal- Financial - Collateral
Sectoral exposure- Emerging sectors
Source of Funds - Capital Market- Govt. of Malaysia
Payment terms - Upfront interest- Cash flow based payment
Fees & Charges- Cost recovery
Section 2
23
Who and What MDV Finances
•All Costs (equipment/infrastructure/hardware, software, operational costs) directly incurred for the project
•Up to the lower of 85% of the contract value or Actual Cost
•Projects should be Malaysia-centric. Financing of overseas project subject to MDV overseas financing guideline
What MDV Finances
•Malaysian companies that PROVIDE high value added technology solutions
•Malaysian companies* that PROCURE high value added technology solutions
•Malaysian companies* that PROVIDE GOODS to technology companies for producing high value added technology products
Who MDV Finances
Section 2
Contents
CONTENTS
24
Section 1
MDV’s Processes and ProductsSection 2
Background on MDV
MDV Success StoriesSection 3
Pre-amble Impact of MDV Programs
25
MDV Portfolio by Sectors
55308375.72500016%
870642991.88090188%
67734231.19957%
Total MDV Portfolio based on ICT, Biotechnology and Renewable Energy sectors
Biotechnology Information technology and services Renewable Energy
Section 3
26
SME ICT & Biotech Sector• MDV launched Small Project Financing Facility (loans < RM2 million) in July 2007,
providing approval within 14 days.• Since inception up to 31 January 2012, MDV approved more than 243
applications cumulatively since 2003, totaling more than RM78 mln
Green Tech Sector• Sectors supported include Energy Generation/ Storage /Infrastructure/ Efficiency;
Transportation; Water & Wastewater; Air & Environment; Recycling & Waste; Materials; Agriculture & Manufacturing/ Industrial
• As at 31 January 2012, MDV approved 12 applications comprising of 11 companies, totaling RM136 mln
ICT Sector• Sectors supported include Communications/Network Media; Electronic/Semi-
Conductor; Application, Content & Multimedia; Internet; and IT• As at 31 January 2012, MDV approved 462 applications comprising 304 ICT
companies cumulatively since 2003, totaling RM4,890 mln
MDV Role – Innovative FinancierSection 3
Biotech Sector• Sectors supported include Natural Products; Medical Devices/Diagnostics;
Contract Manufacturing/Research; Industrial Biotechnology; Bio-Informatics• As at 31 January 2012, MDV approved 35 applications comprising 30 Biotech
companies cumulatively since Biotech Product launch in May 2008, totalingRM313 mln .
27
A Sample of MDV Achievements & Success Stories
AQUARIA KLCCWORLD-CLASS AQUARIUM
WITH 95,000 VISITORS MONTHLY
ePEROLEHANGOVERNMENT
ePROCUREMENT SYSTEM
eTANAHINTEGRATED LAND
MANAGEMENT SYSTEM FOR LAND OFFICES
DATA CENTERSDATA CENTERS AND IP
TRANSIT SERVICE
IT ISMALAYSIA-WIDE TRAFFIC MANAGEMENT SYSTEM
MAMPUDEVELOPMENT OF
GOVERNMENT’S ICT SECURITY
Digital Content3D ANIMATED FEATURE FILM
‘RiBBIT’
3D ANIMATION ‘UPIN & IPIN’ AND ‘GENG:
PENGEMBARAAN BERMULA’
PRS (Police Reporting System)AUTOMATION OF POLICE
PUBLIC COMPLAINTS REPORTING STRUCTURE
Wireless BroadbandWIMAX WIRELESS BROADBAND
WITH 350,000 SUBSCRIBERS
DIGITAL CONTENTGLOBAL COMPUTER AND VIDEO
GAME DEVELOPMENT
media infrastructure companyINDOOR DIGITAL MEDIA (IDM) FOR BANKS AND GOVT OFFICES
Transportation ePurseAUTOMATED REVENUE
COLLECTION, AND ePAYMENT SYSTEMS
Biomass EnergyBIOMASS-BASED BOILER
SYSTEMS FOR ALL SECTORS
Advanced Telecoms InfraADVANCED COMMUNICATION
TECHNOLOGIES AND SOLUTIONS
Semi-ConductorMANUFACTURING OF ICs FOR SEMI-CONDUCTOR INDUSTRY
VSAT CommunicationsPROVISION OF VSAT
TECHNOLOGY & SOLUTIONS
Military Flight SimFLIGHT SIMULATOR AND
MISSION CONTROL SYSTEMS
GOVERNMENT SYSTEMSFINANCIAL MANAGEMENT
SOLUTION SOFTWARE
Mobility/ID AuthenticationSMARTCARD AND
BIOMETRICS VERIFICATION DEVICES
Section 3
MALAYSIA DEBT VENTURES BERHAD (578113-A)
Level 5, Menara Bank Pembangunan, 1016, Jalan Sultan Ismail, 50250 Kuala Lumpur.
General Line: +60 3 2617 2888 Fax : +60 3 2697 8998Email: [email protected]: www.mdv.com.my
Thank you