Mapping Khazanah’s role in Malaysia’s tech investments

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Among all of Malaysia’s state-owned financiers, no one comes close to Khazanah Nasional on the breadth and depth of tech and startup investments.

Founded in 1993, the sovereign wealth fund’s earliest foray into tech came by way of owning chip foundry SilTerra. This was during former prime minister Mahathir Mohamad’s industrialization drive in the ‘90s.

In 2021, Khazanah divested SilTerra to a Bursa Malaysia-listed tech company.

But Khazanah’s modern tech mandate as we know it – of ecommerce and software – only happened in 2012. The sovereign wealth fund decided to establish a small department to look at investing in both local and overseas startups.

Khazanah declined to participate and comment for this story. Findings presented in this report are based on Tech in Asia’s research.

Bullish on China

The impetus back then by now-convicted former prime minister Najib Razak was to foster greater ties with China. This was around the time when China ramped up its Belt and Road Initiative.

Among Khazanah’s earliest investments were into tech giants Alibaba and Ant Financial.

The sovereign wealth fund sold its stake in Alibaba and made a return of US$1.2 billion on an investment of US$250 million. It still holds a stake in Ant Financial, ostensibly on the expectation of the fintech major listing one day.

Khazanah also owns and runs Xeraya Capital, a private equity and VC life sciences fund established in 2008.

Xeraya is led by Fares Zahir, who worked at Khazanah as an analyst prior to being appointed as the life sciences fund’s CEO. Fares also had stints managing money for European asset manager Schroders and global investment bank UBS.

In 2021, Xeraya joined the US$50 million series C round of Congenica, a UK-based digital health firm. This is the fund’s most recent investment at the time of writing.

But Xeraya is a small fund with a specific focus: biotech and healthtech firms.

Wither accountability

Top-down play

Limited by Malaysia’s affirmative action policy