Malaysia Debt Ventures Berhad (MDV) would like to refer to the recent articles on the purported write-off of RM400 million loan owed by MDV to the Government.
MDV wishes to state that the RM400million loan conversion to equity is not a write-off exercise and it is not due to MDV’s inability to repay the loan to the Government.
The objective of the conversion exercise is to strengthen MDV’s equity position in order to balance its current portfolio size and to ensure that MDV has sufficient equity to support its future portfolio growth prudently.
Since its inception in 2002, MDV has successfully grown its loan portfolio which currently stands at about RM1.3 billion. The RM400 million is the balance from the RM1.6 billion original loan from the Government out of which a total of RM1.2 billion has been paid back by MDV.
The loan conversion to equity is crucial to enable MDV to continue its role as a technology financier to SMEs. To date, MDV has disbursed over RM8.4 billion to more than 600 projects undertaken by SMEs that are high risk, but high potential, in high value technology projects in the mandated sectors including ICT, Green Tech and Biotech.
MDV plays a critical role in funding entrepreneurship in these sectors and supporting SMEs in undertaking their vital contribution to the Malaysian economy in high risk areas which traditional financial institutions are not ready to support due to the SMEs’ limited business capital, early stage business life cycle and uncommercialised technology.
Through prudent disbursement and stringent loan monitoring processes, MDV has achieved a profit of RM91 million over five years including the forecast for financial year ending 31 December 2014. MDV has paid a dividend of RM3.6 million to the Government.
The additional equity facilitated by the loan to equity conversion enables the strengthening of MDV’s paid-up capital in order to balance the size and risk of its portfolio while streamlining the ratio of MDV’s current capital ratio to funding portfolio and bringing it in line with that of other development financial institutions.