Receiving Investment: Approach and Flow Submission of Investment Proposal a. Business Plan b. Financial summary: Sale, P&L, Capital Expenditure, R&D, Financial capability 14 days Review: Discuss with Non compliance proponent to Within promoted areas, compliance with bring into policies, no threat to national security, compliance, not against Anti Money Laundering Act. to amend or withdraw Investment test: ‘net benefit to the state’ a. Economic and socio economic impact b. Technology advancement Amendment c. Implication on existing industry 14 days Presentation and discussion Experts may be invited in the discussion Immediate decision encouraged 14 days Formal letter: approval or conditional Ensure approval subject to modification compliance a. Allocation of suitable site Provide b. Seeking Investment approval assistance Monitoring within 3 months c. Investment to commence within 6 months from all the relevant approvals
Joint Venture/ Collaboration: Approach Submission of Investment / JV Proposal a. Business Plan: business, experience, technology, resources b. Financial summary: Sale, P&L, Capital Expenditure, R&D, Financial capability 14 days Review: Discuss with Non compliance proponent to Within promoted areas, compliance with bring into policies, no threat to national security, compliance, not against Anti Money Laundering Act. to amend or withdraw Investment test: ‘net benefit to the state’ a. Economic and socio economic impact b. Technology advancement Amendment c. Implication on existing industry d. Compelling case for JV e. Risk analysis & net benefit analysis 14 days Presentation and discussion Experts may be invited in the discussion Immediate decision encouraged 14 days Letter: conditional approval subject to: Failure on due diligence a. Successful due diligence by and JVA – independent advisors Rejection, b. JV Agreement Monitoring termination
Decision Making Consideration a. There must be due-diligence conducted by independent professionals in order to ensure viability of the partner. b. There must be an agreement before the partnership becomes a reality. c. There must also be a firm commitment on the part of each member. d. Form joint ventures with experienced partners. If the partners do not have approximately equal experience, one can take advantage of the other, which can lead to failure. e. Partners in joint ventures would often be better off participating in small projects as a way to test one another instead of launching into one large enterprise without an adequate feeling-out process. f. Inherent in partner selection is the understanding of potential partners goals such as having complementary strategic objectives. g. Potential partners should also possess complementary skills. Each partner must contribute more than capital to the project, bringing other competencies into the venture. One firm may bring technical skills and another may bring knowledge of the market. There are many skills that a firm can bring into the relationship: managerial expertise, production facilities, or access to limited resources. Skills are most easily meshed when partners have similar, but not identical, products. If both produce an identical product it may be difficult for them to work together. Even if skills are complementary competition may drive them apart and cause the venture to fail. h. While the partners must offer complementary objectives and skills, both partners must believe that they can trust each other and that mutual commitment is a reality.Strategic InvestmentPerak Bio may also make Strategic Investment. Main priorities include focus on focus on thereal return on investment; and a focus on the long term investment strategies in whichinnovation and speedy implementation of new ideas play a major role a. Perak Bio may take the following approach in its investment in investee companies: i. Subscribing to Ordinary shares in certain companies as strategic investment and strategic partners;
ii. Subscribing to Preference Shares in certain companies as strategic investment and with a view of guaranteed income upon the investee company makes profit; iii. Subscribing to loan stock and debentures with strategic exit and guaranteed income. iv. Perak Bio will have to be innovative on the land which used as part of investment. It is proposed that where investors may not afford land price, land is sold on deferred payment basis based on ‘al bai bithaman ajil’ where the land may be charged to the land and paid on deferred payment when the buyer is ready to pay. Inability to pay will revert the land to Perak Bio. This will reduce the risk of Perak Bio being involved in risky and unknown business. In the alternative the land will be considered as part of long term debt instrument issued by Perak Bio to the investor. v. Perak Bio will have to go through an investment approach analysis in order to decide which investment approach it is taking and this will be on a case by case basis. As a rule, if Perak Bio acts as a venture capitalist type of investor, the return of investment has to be calculated properly. New products will take longer to achieve success, on average between 10 – 15 years and this requires different approach to investment and rate of return. Proven products with proven technologies will provide faster return and the expected ROI will be lower. vi. Return of investment depends on the on the stage of investment. For example an early stage investor in the form venture capitalist or business angel would expect a return of between 5 times to 10 times the investment. A late stage investor would normally expect a return of 3 times the investment. This is because early stage investor expects to face higher risk compared to the later stage investor which has its risk reduced. vii. As a State agency, Perak Bio will also have to look into other forms of return, and not just from the perspective of monetary return. ROI for states could mean creation of high skill, high wage jobs; an opportunity to retain the best and brightest students from state universities; or, even the induced economic impact of numerous construction and service jobs associated with a vibrant bioscience industry cluster. viii. In this sense, Perak Bio investment approach has to be balanced between reaching optimum financial return as well socio-economic return to the state of Perak and its people as Perak Bio is not an ordinary private company as it also functions as a government implementing agency.