1. 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

2. 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

3. 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 Investment
Perak Bio may also make Strategic Investment. Main priorities include focus on focus on the
real return on investment; and a focus on the long term investment strategies in which
innovation 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;

4. 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.