Malaysia Debt Ventures To Provide Financing For Green Technology

Posted on July 27, 2010. Filed under: Environmental Economics |

(Bernama) — Malaysia Debt Ventures Bhd (MDV) plans to provide financing for entrepreneurs involved in green and clean technology in tandem with the government’s move to promote the sector.

MDV managing director and chief executive officer Md Zubir Ansori Yahaya said the company had submitted its proposal to the Finance Ministry and hoped to get approval soon.

MDV is a premier innovative financier and development facilitator that currently focuses on biotechnology and information and communications technology (ICT) industries.

“We are keen to finance green and clean technology, the growth area that not many financial institutions are willing to give out loans,” Zubir told reporters after a half-day forum on “Financing the New Economy Innovatively” organised by MDV here Tuesday.

“This is part of our business plan. Hopefully, we can implement it before our financial year ending March 31, 2011,” he said.

Zubir said MDV had appointed an expert to do a research study on green and clean technology in order to get a better understanding about the sector before coming out with the funding.

“We must be able to understand the sector first before we provide the funds. The entrepreneurs involved in this sector don’t have collaterals but they have strong ideas, creativity and intellectual property,” he said.

According to Zubir, MDV has also submitted a proposal to the Finance Ministry to enable the company to provide a new type of financing called “debt convertible”, that would allow it to convert part of its financing to warrant or equity at a particular time.

Convertible debt is a financing term that is used to refer to any type of debt financing where there is the option of converting the outstanding balance due to some other form of security or asset.

In the case of mortgage, convertible debt can be any type of arrangement that allowed the conversion of the outstanding balance owed into equity.

“We want to provide not just a normal loan but we are also keen to go into a debt convertible loan, whereby it will place us more favourable position to be able to finance a high risk sector instead of funding a company or project that has a secured market,” Zubir said.

“Entrepreneurs involved in high risk sectors normally don’t have strong asset backing and the potential of repayment is uncertain,” he said, adding that a debt convertible loan is for technopreneurs looking for innovative financing at the point of production stage.

As at March 31, 2010, MDV has approved a total of more than RM4.8 billion to 350 companies since its inception in 2002.

A total of RM346 million worth of loans was approved to locally incorporated biotech companies since the launch of the Biotech Financing Programme in May 2008, while RM4.4 billion worth of loans was approved for the ICT sector.

MDV’s loan portfolio reached RM1.2 billion as at March 31, 2010.

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