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KUALA LUMPUR: Two Malaysian government-linked firms – including its sovereign wealth fund – have been urged to address public concerns over their recent loss-making investments in FashionValet, which is the country’s first fashion e-commerce platform.
Khazanah Nasional and Permodalan Nasional Berhad (PNB) – an investment management firm – came under the spotlight after Malaysia’s finance ministry earlier this week said in a written parliamentary reply that both companies had recorded a loss of RM43.9 million (US$10.1 million) from the sale of their minority investments in the e-commerce platform.
The two sold their collective stakes in FashionValet at the end of 2023 for RM3.1 million. This marks a significant loss – or about 93.4 per cent – from the initial RM47 million investments made in 2018, local media reported.
On Thursday (Oct 31), Malaysia’s Communications Minister Fahmi Fadzil told local media that both Khazanah and PNB should explain the losses because it involves public money.
“Since public money is involved, naturally people are asking questions. We are also starting to see content revealing what may have been going on … in the public interest, I believe they should issue a statement,” Mr Fahmi said.
However, Mr Fahmi – who is also the Unity Government spokesman – added that the two firms should be given some time to issue a formal response.
In 2018, Khazanah invested RM27 million while PNB invested RM20 million in FashionValet, owned by renowned fashion entrepreneur Vivy Yusof and her husband Fadzarudin Shah Anuar.
“The total loss from the sale of FashionValet shares is negligible compared to Khazanah’s and PNB’s overall income for the relevant year,” the finance ministry said in its written reply on Oct 28.
Following reports that FashionValet had been sold in what was described as a “fire sale” to another local investment firm NXBT Partners, the finance ministry had defended Khazanah’s initial investment into the company.
The ministry said earlier in September that the investment was in line with the sovereign wealth fund’s mandate at the time to promote local tech entrepreneurs and enable them to gain exposure in the growing e-commerce sector.
“At the same time, PNB’s investment thesis was focused on supporting fast-growing Bumiputera digital retail companies to develop into a regional retail platform for Malaysian brands.” it added.
The finance ministry also said that the COVID-19 pandemic severely affected FashionValet’s business, and that the sale to NXBT Partners was a responsible exit for Khazanah and PNB.
In 2022, amid rising competition and other business challenges, Ms Vivy and her husband shut down FashionValet’s e-commerce platform, pivoting instead to focus on their own in-house modest brands, Duck and Lilit.
Ms Vivy is currently the creative director, while her husband Mr Fadza holds the position of chief executive officer.
According to The Edge Malaysia, FashionValet has been recording losses for the past three consecutive years. In the financial year which ended on Dec 31, 2022, FashionValet incurred a loss-after-tax of RM34.51 million, which is three times the RM9.63 million loss recorded in 2021.
“There is too much that I want to share but for now, I will allow people to say what they want to say,” Ms Vivy posted on her social media on Oct 30, adding that she will issue a statement “soon”.
This is after netizens took to social media, questioning how the large amount of money invested was managed by her multi-million dollar e-commerce company.
“This is where our money went … one business took all RM43 million funds and lived a super rich lifestyle,” said an X user @annunxia on Oct 29.
“How can both PNB and Khazanah continue to invest (in FashionValet) although the company is continually recording losses? Who decided on the deal?” said another X user @Alturkistiano.
An influencer and modest fashion icon with over 1.8 million followers, Ms Vivy is known for her luxurious lifestyle.
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