fund management firm to manage fund (ii) under the sme ... · request for proposal for a fund...

Request for Proposal

for a

Fund Management Firm to Manage Fund (II) under the

SME Investment Partner Programme

Issuer : SME Corp. Malaysia Level 6 Block B Platinum Sentral Jalan Stesen Sentral 2 Kuala Lumpur Sentral 50470 Kuala Lumpur

Issue Date : 7 April 2017

Closing Date : 9 June 2017

SME INVESTMENT PARTNER

Request for Proposal 2

TABLE OF CONTENTS

Contents

1. INTRODUCTION AND PURPOSE 3

2. DEFINITIONS 5

3. EXPRESSION OF INTEREST 7

4. SME INVESTMENT PARTNER PROGRAMME 8

4.1 REQUIRED FUND CORPUS OF RM50 MILLION 10 4.2 REQUIRED KEY PROVISIONS OF THE FUND MANAGEMENT AGREEMENT 10 4.3 CONDITIONS PRECEDENT TO RECEIVING THE SME CORP. COMMITMENT 10 4.4 REQUIRED CONDITIONS FOR THE FUND’S LEGAL STATUS 11 4.5 REQUIRED CONDITIONS FOR LEGAL STATUS OF THE SME PARTNER 12

5. ELIGIBILITY CRITERIA OF SME PARTNER 13 13

6. ROLES AND RESPONSIBILITIES OF SME PARTNER 15

7. REQUIRED INVESTMENT POLICIES 16

8. SELECTION CRITERIA OF SME PARTNER 20

8.1 GENERAL CRITERIA 20 8.2 CRITERIA SPECIFIC TO THE SIP PROGRAMME 20

9. RFP TERMS AND CONDITIONS 22

9.1 LIABILITIES OF SME CORP. MALAYSIA 22 9.2 PROPOSAL PROCESS MANAGEMENT 22 9.3 RFP CONFIDENTIALITY & OWNERSHIP 22 9.4 SECURITY – NON DISCLOSURE AGREEMENT 22 9.5 SME PARTNER PRESENTATION 23 9.6 CONTRACT NEGOTIATIONS 23

10. OTHER TERMS AND CONDITIONS 24

10.1 RESPONSIVENESS OF APPLICANT 24 10.2 PROPOSAL SUBMISSION DEADLINE 24 10.3 FORM OF SUBMISSION 24 10.4 ADDITIONAL INFORMATION 24 10.5 PROPOSAL / PROPOSAL VALIDITY 25 10.6 CLARIFICATION AND AMENDMENT OF RFP DOCUMENTS 25 10.7 CONFIDENTIALITY 25 10.8 NO FEES 26 10.9 FRAUD, CORRUPTION AND STANDARD OF CARE 26 10.10 COST OF PREPARATION OF THE PROPOSAL 26 10.11 ASSIGNMENT AND SUB-CONTRACTING 26 10.12 DISPUTE RESOLUTION 26 10.13 OTHER CONDITIONS OF THE RFP 27 10.14 INTERVIEWS AND NEGOTIATIONS 27

11. RFP RELATED QUESTIONS / CLARIFICATIONS / SUBMISSION 28



1 INTRODUCTION AND PURPOSE

SME Corporation Malaysia (SME Corp.) wishes to continue its support of small

and medium enterprises (SMEs) in Malaysia through the creation of a risk capital

investment fund (“Fund II”) under the SME Investment Partner (SIP) Programme.

The Fund will provide cashflow-based, risk capital financing in the range of

RM500,000 to RM5 million, combined with a degree of technical assistance

support. In order to attract a capable fund management firm to meet the

foregoing objectives, SME Corp. seeks to provide significant financial incentive to

a fund management firm to raise and manage the Fund.

In exchange for agreement and selection to manage the Fund within certain

policy parameters established by SME Corp. and Investors in the Fund, SME

Corp. is offering to commit to investing the first RM20 million in the Fund (SME

Corp. Commitment).

This request for proposals (RFP) provides a description of the Fund, its

objectives and investment mandate with which the selected Fund Management

Firm (the “SME Partner”) and Fund must agree to comply in order to receive

disbursement of the SME Corp. Commitment.

SME Corp. is inviting competent fund management firms to apply as the SME

Partner under the SIP Programme. The SME Partner may be either a firm

managing the Fund under a Fund Management Agreement (or other similar

contract with the Fund) or may be composed of personnel employed direct by the

Fund. However Applicants should be aware that in either case, they are

competing for award of SME Corp. Commitment to the Fund, an investment

vehicle which has not yet been formed and which the Applicant proposes to

create should the Applicant be selected as the SME Partner.

A fundamental obligation of the SME Partner will be to raise a required minimum

of RM50 million, inclusive of the SME Corp. Commitment, in the form of share

capital and other contributions from the investors in the Fund (the “Investors”).

For the Fund to be awarded the SME Corp. Commitment, the SME Partner must

also obligate the Fund and the Investors to comply with the provisions described

herein and as required by the SME Corp. Commitment Agreement.

This template will present a standard format for an RFP from potential Fund

Management Firm. It is intended to assist them to prepare their proposals based

on the requirements of the SIP Programme. The template serves three main

purposes:

1. Establishing a standard format to invite potential industry players to serve

as SME Partner under the SIP Programme.



2. Ensuring that SME Corp. as the agency that oversees the implementation

of the SIP Programme develops a well-defined qualifying criteria and

requirements in selecting the SME Partner.

3. Provide a basis for selection of SME Partner for the SIP Programme.

This RFP contains information relevant to the submission of proposals together

with the terms and conditions under which they are to be received and evaluated.

The documents comprising this RFP, together with the attachments hereto, form

the core proposal solicitation documents. It should nonetheless be noted that the

information provided herein, and in the attachments hereto, is not in its final form

and is subject to negotiation with the SME Partner, and subsequent amendment,

before the founding documents of the Fund are finalised.



2 DEFINITIONS

Unless the stated context implies otherwise, the following definitions apply to all

documents related to the RFP and award of the SME Corp. Commitment:

“Applicant” means each of those parties invited by SME Corp. to apply for the

SME Corp. Commitment on behalf of the Fund and submitting a proposal.

“Fund Commitment” means monies contributed to the Fund in the form of

Redeemable Convertible Preference Shares (RCPS) which is loan convertible to

equity, may be deployed by the Fund for financing, investments and operations in

the manner in which the capital of the Fund is deployed.

“Fund Expenses” means, in the case that the Fund Management Firm is an entity

distinct from the Fund and engaged by the Fund under the Fund Management

Contract, all expenses of the Fund not covered by the Fund Management Fee,

including but not limited to, board-related expenses, audits and litigation on

behalf of the Fund and itself.

“Fund Management Agreement” means, in the case that the Fund is managed by

the Fund Management Firm under contract with the Fund, the agreement

between the Fund and Fund Management Firm, including all amendments and

revisions thereto, delineating the terms and conditions under which the Fund

Management Firm is to provide investment management services to the Fund.

“Fund Management Fee” means a set fee paid to a firm engaged by the Fund

and its Investors to manage the day-to-day operations of the Fund, the amount of

such fee being exclusive of Fund Expenses.

“Investor” means any party providing a portion of the Fund Corpus, which may

include the SME Partner.

“SIP Programme” means the SME Investment Partner programme, in Malaysia to

be funded by SME Corp. and private investors.

“Fund” means the SME investment vehicle to be created by the SME Partner who

is the recipient of SME Corp. Commitment.

“Borrower/ Investee” means all SMEs provided financing by the Fund under the

SIP Programme.

“Proposal” means the aggregate of all documents submitted to SME Corp.

Malaysia by the Applicant in response to the RFP.



“Prospective Investee” means any SME firm that meets the provisions of the

Required Investment Policies (Section 8) which is being considered for

investment by the Fund but in which the Fund has not yet invested.

“RFP” means the Request for Proposals issued by SME Corp. Malaysia to those

potential firms invited by SME Corp. Malaysia to apply for the SME Corp.

Commitment on behalf of the Fund.

“SME Partner” means the Applicant selected by SME Corp. Malaysia whose

proposed Fund will be awarded the SME Corp. Commitment and who may be a

new or existing entity formed by one or more practitioners in the capital market

industry to finance viable SMEs either in the form of equity, debt or a hybrid of

debt and equity.

“SME” means micro, small or medium enterprise as defined by the National SME

Development Council (NSDC) Section 8 of the RFP, “Required Investment

Policies”.

“Early-stage SME” means any business that have been in operation within the

period of 3 to 5 years.



3 EXPRESSION OF INTEREST

In order to gain a credible estimate of the number of potentially qualified parties interested to compete in the RFP solicitation, SME Corp. Malaysia seeks Expressions of Interest from those who wish to respond to the RFP (the “Applicants”). All interested Applicants must submit an Expression of Interest to SME Corp. Malaysia to qualify as potential Applicants.

The Expression of Interest must be either scanned as a PDF file and e-mailed to the e-mail address below or printed and placed in a single, sealed envelope and delivered to the following physical address no later than 5.00 pm on 21 April 2017:

Nik Mohd Zainul Kamarun Nik Kamil [email protected]

Policy Monitoring & Inclusive Development Division SME Corp. Malaysia Level 7 Block C Platinum Sentral Jalan Stesen Sentral 2 Kuala Lumpur Sentral 50470 Kuala Lumpur

Applicants may submit prepared (printed) materials or texts about their firms focusing on their capabilities, credentials, experience, scope of services, and track record of performance. In submitting Expressions of Interest to SME Corp. Malaysia, Applicants are urged not to submit unnecessarily elaborate marketing or sales brochures or other representations beyond those sufficient to present a complete and effective Expression of Interest. SME Corp. Malaysia will forward copies of the Expressions of Interest to the Evaluation & Selection Committee. It is advised that Applicants use the most reliable courier services available or submit the documentation by hand. Expressions of Interest must be in the form of a letter from either the Managing Director/ Chief Executive Officer of the Applicant Firm on the Applicant Firm’s letterhead. The Expression of Interest should acknowledge that the RFP has been read and understood and that the Applicant intends to prepare and submit a Proposal. It must also state that the eligibility requirements listed in Section 6 will have been met by the time of the submission of the Proposal and that the Applicant is prepared, if required, to provide clear evidence thereof, as also specified in Section 6. SME Corp. Malaysia will promptly reply in writing to each Expression of Interest (within at least 5 business days of receipt), stating whether the Applicant may or may not submit a proposal or requesting that certain evidence of eligibility be provided.



4 SME INVESTMENT PARTNER PROGRAMME

The SME Investment Partner (SIP) programme is one of the High Impact

Programmes under the SME Masterplan (2012-2020) with the aim to enhance

access to financing for SMEs, particularly those at early-stage through the

provision of funding in the form of debt or a hybrid of debt and equity. SIP entails

a co-funding initiative between the public and private sector, whereby an

investment entity (to be referred as the “Fund”) will be established to raise funds

from private investors and which will be matched by the funds from the

Government through SME Corp. commitment. Once sufficient capital is raised,

the Fund will channel the funds to viable SMEs in the form of equity, debt or a

hybrid of debt and equity.

SME Corp. Malaysia will identify and appoint a suitable Fund Management Firm

to implement SIP. The Programme will complement existing financing landscape

for SMEs through the followings:

Offers the choice of both equity and debt financing to meet SMEs’

financing needs;

Finance mainly early-stage SMEs as opposed to the normal venture

capital and bank financing which are more inclined towards firms at the

growth and expansion stages;

Covers SMEs in all sectors including mainstreet firms that have strong

high growth potential, innovativeness and in newly emerging areas. This

is more well spread compared to current venture capital financing which

are mainly for technology-based companies; and

Crowd in private investors to invest into viable SMEs initially through

public-private partnership (co-funding), with an exit in Government funds

over time.

The broad framework for the SIP Programme is as follows:



The central focus of the SME Investment Partner Programme is the Fund Management Firm (referred to as the “SME Partner”). The SME Partner is a new non-banking funding institution which will be introduced to fulfill the following:

i) New legal entities run by those with experience in fund management but focus only on financing and developing SMEs and supported by non-financial services to enhance success of SMEs;

ii) They are different from existing fund managers as their functions extend beyond provision of financing to include mentoring and technical assistance.

iii) Given their mandates to provide financial assistance and mentoring of SMEs, the SME Partner will also enjoy certain privileges not given to fund managers, in terms of being established through a public and private partnership, and having access to Government funding support under the Programme framework.

The SME Partner can be new or existing entity, a combination of two or more angels or foreign players and will manage the Fund separately from its other portfolios through a clearly defined scope as per the design of the SIP Programme. The SME Partner is expected to closely mentor these SMEs and provide the required guidance to enhance success rate. Hence, the SME Partner will be subjected to certain holding period or exit term in the SME investee. The performance and activities of the SME Partner will be monitored by SME Corp. Malaysia As stated above, in applying for the SME Corp. Commitment, the selected SME Partner is acting on behalf of the Fund and the Investors. Once the Fund is formed, compliance with the SME Corp. Commitment Agreement is jointly the responsibility of Fund, as recipient of the SME Corp. Commitment, and the selected SME Partner, either as employees of Fund or as manager of Fund’s operations under the Fund Management Agreement. Therefore, the terms of the SME Corp. Commitment Agreement must be incorporated, either directly or by reference, into the Fund Management Agreement providing for the selected SME Partner to ensure Fund’s compliance with the SME Corp. Commitment Agreement.



4.1 REQUIRED FUND CORPUS OF RM50 MILLION

4.1.1 The SME Corp. Commitment Agreement requires that a minimum Fund Corpus equivalent to RM50 million must be committed to the Fund in order for the Fund to receive the SME Corp. Commitment. SME Corp. Malaysia in its role as a first mover to attract private investments into the Fund, will invest RM20 million in the form of Redeemable Convertible Preference Shares (RCPS), which is loan convertible to equity at 2% which will be converted to ordinary shares if and when necessary. In this regard, SME Corp. Malaysia is limiting the upside returns while sharing the downside risk with the private investors.

4.1.2 The Fund Corpus may be composed of combinations of equity

contributions and loan proceeds, provided that all such monies are directly available to Fund and that all agreements with Fund providing for such monies are in no way in conflict with the terms of the SME Corp. Commitment Agreement.

4.2 REQUIRED KEY PROVISIONS OF THE FUND MANAGEMENT

AGREEMENT 4.2.1 SME Corp. Malaysia, in its role as provider of SME Corp. Commitment, is

not a party to the Fund Management Agreement. However, in order for Fund to be awarded the SME Corp. Commitment, both the selected SME Partner and the Investors must agree to comply with the SME Corp. Commitment Agreement in the operation of the Fund. Below are the key provisions of the SME Corp. Commitment Agreement which must be reflected in the Fund’s Shareholder Agreement, Fund Management Agreement, and potentially, other founding documents of Fund (together, such documents being Fund’s “Constituent Documents”): Investment Agreement

The Fund must invest in accordance with the Required Investment Policies described in Section 8.

The investment practices and operations of the Fund must be generally consistent with the Final Agreement.

4.3 CONDITIONS PRECEDENT TO RECEIVING THE SME CORP.

COMMITMENT 4.3.1 In order for the Fund to receive the SME Corp. Commitment, the selected

SME Partner must furnish to SME Corp. Malaysia copies of the following documents, or other equivalent legal documents, signed by all parties to each agreement:

a Shareholders Agreement, Operating Agreement, or other such legally binding document in which all Investors participating in the equity shares of Fund commit to their portions of Fund’s share capital;



any legally binding loan agreements for contributions of monies to the Fund Corpus;

M&A, Statutes, or other document duly filed with, and accepted by, the appropriate regulatory authority of the jurisdiction in which Fund is legally established;

M&A, Statutes, or other document duly filed with, and accepted by, the appropriate regulatory authority of the jurisdiction in which the selected Fund Management Firm is legally established;

the Fund Management Agreement in which the conditions of the SME Corp. Commitment are incorporated either directly or by reference; and

stamped copies of the SME Corp. Commitment Agreement as required by SME Corp. Malaysia.

4.4 REQUIRED CONDITIONS FOR THE FUND’S LEGAL STATUS

4.4.1 As stated above, the Fund must be formed as a managed pool of money with a Fund Corpus of no less than RM50 million, established specifically to invest in Malaysian SMEs as defined in Section 8, “Required Investment Policies”. The Fund may be referred to as an investment company, finance company, investment trust, investment firm, private equity fund, venture capital fund, or other terms. However, the Fund must have the following characteristics:

A company incorporated under the Malaysian Companies Act or registered as a Limited Liability Partnership (LLP) in Malaysia;

Minimum shareholder’s funds (for corporations) or capital contribution (for LLPs) of RM100,000;

having a limited number of shareholders, but not less than two, and not offering shares to the general public on a stock exchange or otherwise;

engaged exclusively in private investment transactions, as opposed to the purchase of existing shares on any type of public exchange; and

having, as its core business investment in private SMEs in Malaysia and the provision of non-financial assistance to those SMEs in which it invests or in which it potentially may invest, as opposed to the provision of fee-paid investment advisory and/or consulting services to parties in which it is not invested.

may be a subsidiary or affiliate of another investment vehicle or financial institution. However, it must have separate legal distinction from its parent or affiliate organisation.



4.5 REQUIRED CONDITIONS FOR LEGAL STATUS OF THE SME PARTNER

4.5.1 If the SME Partner is a separate legal entity from the Fund, the SME Partner must operate in Malaysia through a representative office, subsidiary, or other appropriate form as required by Malaysian law.



5 ELIGIBILITY CRITERIA OF SME PARTNER

5.1 An SME Partner must possess deep understanding of SME business

operations as well as possess experience in banking, fund management

and other areas of finance. The key attributes of SME Partner and its

management team include:

Registered with the Securities Commission Malaysia either as a Venture

Capital Corporation or Private Equity Corporation (VCC/ PEC) or

Venture Capital or Private Equity Management Corporation (VCMC/

PEMC) or licensed under the Moneylenders Act 1951 (if it is involved in

activity of money lending to business entities);

Fit and proper with relevant skillsets, at least 1 director with a minimum

of 10 years relevant experience;

No conflict in carrying out its function as the Manager of the Fund;

Experience in operating a business and fund-raising activity;

Experience in providing management consulting services to SMEs;

Experience in managing several business cycles of SMEs;

Experience indicating an ability to recognise patterns in behaviour of

entrepreneurs, businesses and markets;

Able to demonstrate and understand financial statements of private

operating companies;

Viable and practical funding strategy and mechanism;

Presence of management support systems and other resources (e.g.,

"back office" and supervision) to assist the Fund’s operations;

Ability of the Applicant to raise the required minimum capital for Fund,

as demonstrated by the Applicant's track record in fund raising and the

quality of letters of provisional or conditional commitments of capital

from duly authorised executive officers of investors in Fund (the

"Provisional Commitment Letters" or evidence of having raised an SME

fund in the past, as described below in Section 6.1.2.)

Exposure to international standards of business and conduct.

Demonstrates high level or professionalism.

Open to foreign and local players.



5.2 Ability to Raise Fund: In order to be eligible for the SME Corp. Commitment

as stated above, the Applicant must demonstrate its ability to raise a

minimum Fund Corpus of RM50 million. This ability must be demonstrated

by (1) evidence of past success in raising at least RM50 million in capital for

an investment vehicle of which the core purpose was the financing of SMEs

or lenders and grantors indicating their strong interest or intention to provide

monies to Fund. No Applicants will be considered for award of the SME

Commitment in the absence of meeting at least one of these two conditions

and binding commitments for the full required Fund Corpus of at least RM50

million or equivalent be obtained as a condition for award of the SME Corp.

Commitment.

5.3 An Applicant shall respond to the RFP on the basis that the entity is deemed

to have examined and understood the entire content of this RFP. The

Applicant shall also be deemed to have accepted and is bound by the terms

and conditions specified in this RFP. Any limitations of responsibilities that

the Applicant wishes to negotiate should be clearly stated.



6 ROLES AND RESPONSIBILITIES OF SME PARTNER

Among the roles and responsibilities of the SME Partner include:

1. Establish and manage the Fund based on SME Corp. Commitment

Agreement and Fund Management Agreement.

2. Raise funds from private investors through financial instruments such as

debenture, unlisted securities or equities to be matched with funds from the

Government;

3. Identify viable SMEs to be financed under the programme and in

accordance with the Required Investment Policies;

4. Perform financial analysis and due-diligence on potential SMEs;

5. Provide detailed analysis or performance target of the Fund and the SMEs;

6. Provide financing to SMEs only in the form of either equity, debt or hybrid of

debt and equity;

7. Provide hands-on mentoring and technical guidance to the SMEs to ensure

good governance;

8. Identify specific needs of the SMEs and arrange for capacity building and

other assistance through network of referrals and in collaboration with SME

Corp. Malaysia;

9. Monitor loans channelled / investments made to SMEs and ensure timely

repayment and recovery of investments made in SMEs;

10. Ensure timely repayment / service of investments to SME Corp. Malaysia/

Private Investors;

11. Provide on-going and regular financial and operational reporting to SME

Corp. Malaysia and other stakeholders as required or as may be required

under the governing law; and

12. Other duties as described in the SME Corp. Fund Commitment Agreement

and Fund Management Agreement once executed.

In addition, there are a few activities that the SME Partner is prohibited to invest:

i) Other SME Partners, finance companies or finance-type leasing

companies;

ii) Undertake passive or casual businesses such as fixed deposit savings

or purchase of unit thrust;

iii) Purchase of real estate or related activities;

iv) Entity whose primary business activity is deemed contrary to public

interest.



7 REQUIRED INVESTMENT POLICIES

The following elements of investment policy must be part of the Fund’s

constituent documents and incorporated directly or by reference into the Fund

Management Agreement between the Fund and the SME Partner.

7.1 TARGETED INVESTMENTS

7.1.1 Fund Purpose.

While the objective of the Fund is to provide a commercial return to the

Fund Investors, a commensurate purpose of the Fund is to expand and

diversify the private sector in Malaysia. The Fund is intended to

accomplish this by building strong SMEs which will serve as models for

other entrepreneurial activities in Malaysia. In furtherance of these

purposes, these Required Investment Policies obligate the Fund to focus

its investment activity on Investees which operate in Malaysia and

whose businesses both contribute value to the local economy and have the

opportunity to grow and expand on a sustained and profitable basis.

7.1.2 Fund Policy

The Fund must carry out these purposes by making investments consistent

with these Required Investment Policies and by providing efficient and

effective technical and business assistance to Fund’s Investees.

7.1.3 Definition of a Prospective Investee

To qualify as a firm eligible for investment by the Fund (a "Prospective

Investee"), a business must meet the standards set forth in this Section.

The definition of SMEs (revised 2014) endorsed by the National SME

Development Council as follows:



At the time of the initial investment by the Fund, an Investee must be registered with the Companies Commission of Malaysia (SSM) or other equivalent bodies, but exclude:

i) Entities that are public-listed on the main board; and

ii) Subsidiaries of:

Public-listed companies on the main board;

Multinational corporations (MNCs);

Government-linked companies (GLCs);

Syarikat Menteri Kewangan Diperbadankan (MKDs); and

State-owned enterprises.

7.1.4 Malaysian Presence

All investees must be organised or have their principal operations in Malaysia. The Fund may invest in a business only if it meets all of the standards set forth in this Section for its presence in Malaysia at the time of an initial investment by the Fund and at the time of any subsequent investments.

A majority (51% or more) of the capital of the business must be Malaysian owned or are legal entities organised under the laws of the government of Malaysia.

A majority of the assets of the Investee must be located in Malaysia.

A majority of the officers and employees of the Investee must be Malaysian nationals resident in Malaysia.

The principal place of business of the investee, defined as the location at which the majority of its employees reside, must be in Malaysia. Until the end of the Investment Period or, if earlier, the date the Fund is wound-up, the Manager shall procure that all new investment opportunities received by the Manager or its associates for investments that fall within this Investment Policy will first be offered to the Fund.

The investee must be free from any legal proceedings.

7.1.5 Investment Operations - Portfolio Restrictions

The Fund shall comply with the investment restrictions and investment procedures set out below:

The Fund shall not invest more than 10% of total Fund Corpus in any single investee.

The Fund shall not invest more than 30% of total Fund Corpus in a similar business of which any investee is part.

Undertake passive or casual business.



Engage in primary business activity deemed as contrary to public interest.

Refinancing of existing credit facilities, purchase of existing premises and labour costs, expect wages.

Investments by the Fund in a specific investee shall be at least RM500,000 and no greater than RM5 million per investment, including any follow-on investments.

7.1.6 Investment Opportunities

Until the end of the investment period or, if earlier, the date the Fund is wound-up, the SME Partner shall procure that all new investment opportunities received by the manager or its associates for investments that fall within this investment policy will first be offered to the Fund.

7.1.7 Prohibited Investments

Prohibited Types and Characteristics of Investments

The Fund shall not make an investment in any of the following:

(a) any state-controlled entity;

(b) any other pooled multiple investment vehicle;

(c) securities that are listed on any stock exchange or that are otherwise publicly tradable;

(d) any business that is not primarily engaged in the regular and continuous operation of an active business;

(e) any business in which the employees do not carry on the majority of day-to-day operations and the business does not provide control and supervision on a day-to-day basis over persons employed under contract;

(f) any business in which a substantial majority of the proceeds of the investment by the Fund will be passed through the Investee to another affiliated entity, unless the investee controls such affiliate and owns a majority of the equity of such affiliate; or

(g) any business primarily engaged in providing funds to other institutions whose core business is investment or lending,

purchasing debt obligations, lease financing, or other types of financial services.

Investments Presenting Potential Conflicts of Interest



The Fund may not make an investment in any Prospective Investee if, at the time of the investment, any person set forth below has any investment or other substantial economic interest in the Investee.

(a) Any owner, person responsible for the management of the Fund or any employee of the SME Partner or any affiliate of the SME Partner.

(b) Any person employed by a Fund Investor, a Donour, or SME Corp. Malaysia

(c) An economic interest that arises in the ordinary course of business and is transacted on normal commercial terms, including normal commercial banking relationships, will not be considered a substantial economic interest for purposes of this Section.



8 SELECTION CRITERIA OF SME PARTNER

8.1 GENERAL CRITERIA

SME Partner will be appointed based on the Applicant whose Proposal

achieves the highest number of points within a scoring system used by the

Evaluation & Selection Committee. The Evaluation & Selection Committee

recognises the inevitably subjective nature of such scoring and thus,

reserve the right not to disclose either the scoring system or the scores

achieved by the Applicants. However, it is the strong sentiment of the

Government that a thoroughly objective selection process is in the best

interest of not only the SIP Programme but also that of the reputation of

SME Partner and its Investors.

Applicants should be aware of the importance of responding fully to all

aspects of the RFP. Proposals which fail to respond to all required

questions and requests for information will be automatically rejected. It is

advised, however, that responses to individual questions be concise in order

to strengthen the overall impression of the Applicant as portrayed by the

Applicant’s Proposal. Unnecessarily lengthy responses are likely to dilute

the strength of such an overall impression.

In addition to the quality and precision of the proposal itself, the Evaluation

& Selection Committee seeks clear evidence of strong technical knowledge

of both business and finance, strong professional credentials, reputation for

integrity, sound financial standing, and a track record of success in risk

capital and/or related entrepreneurial endeavors. Applicants must also be

able to offer verifiable references from corporate, business and industry

sources who that can unreservedly vouch for the Applicants’ performance,

integrity, and professional backgrounds.

8.2 CRITERIA SPECIFIC TO THE SIP PROGRAMME

In addition to the above-listed attributes normally sought in RFP

solicitations, the Evaluation & Selection Committee seeks, in particular,

evidence of experience and understanding of the following key issues

related specifically to the objectives of SIP:



The nature of entrepreneurship and the particular strengths and

weaknesses common to SME entrepreneurs;

The processes involved in identifying and directly addressing

technical and management issues common to early-stage SMEs; and

The Evaluation & Selection Committee will give significant weight to

evidence that the Applicant has relevant experience in financing and /

or advising SMEs in a wide diversity of industry sectors, particularly

those related to innovative and high-growth areas.



9 RFP TERMS AND CONDITIONS

9.1 Liabilities of SME Corp. Malaysia

This RFP is only an invitation for proposal and no contractual obligation on behalf of SME Corp. Malaysia whatsoever shall arise from the RFP process unless and until a formal contract is signed between SME Corp. Malaysia and the SME Partner. This RFP does not commit SME Corp. Malaysia to pay any cost incurred in the preparation or submission of any proposal or to procure or contract for any services.

9.2 Proposal Process Management

SME Corp. Malaysia reserves the right to accept or reject any or all proposals, to revise the RFP, to request one or more re-submissions or clarification from one or more basic partners, or to cancel the process in part or whole. No SME Partner is obligated to respond to or to continue to respond to the RFP after the submission and closing date. SME Corp. Malaysia will, at its discretion, appoint the SME Partner submitting the best proposal that complies with the RFP. SME Corp. Malaysia may, at its sole discretion, reject any or all proposals received or waive minor defects, irregularities, or informalities therein.

9.3 RFP Confidentiality & Ownership

This RFP is both confidential and proprietary to SME Corp. Malaysia, and SME Corp. Malaysia reserves the right to recall the RFP in its entirety or in part. SME Partner cannot and agree that they will not duplicate, distribute or otherwise disseminate or make available this document or the information contained in it without the express written consent of SME Corp. Malaysia.

SME Partner shall not include or make reference to this RFP in any publicity without prior written approval from SME Corp. Malaysia. SME Partner must accept all of the foregoing terms and conditions without exception. All responses to the RFP will become the property of SME Corp. Malaysia and will not be returned.

9.4 Security – Non Disclosure Agreement

The SME Partner as part of the proposal should sign the non-disclosure agreement to safeguard the confidentiality of SME Corp. Malaysia’s business information and data.



9.5 SME Partner Presentation

If required, the SME Partner will be invited to make presentations at SME Corp. Malaysia. SME Corp. Malaysia shall not be under any obligation to bear any part of the expenses incurred by the SME Partner for the presentations.

9.6 Contract Negotiations

At the completion of the selection process, SME Corp. Malaysia will enter into negotiations with the selected SME Partner. SME Partner should also be aware that the following documents would be included as attachments to the final contract:

This Request for Proposal (RFP).

The SME Partner’s proposal in response – both technical and commercial

Any modifications to the proposal.

An implementation Plan identifying the tasks to be completed with milestones, the assigned responsibilities, and the scheduled completion dates.



10 OTHER TERMS AND CONDITIONS

10.1 Responsiveness of Applicant

As mentioned in clause 6.1 above, the Evaluation & Selection Committee

will reject any Applicant who fails to respond to all requirements of the

RFP by the deadline.

10.2 Proposal Submission Deadline

10.2.1 All Proposals, without exception, must be received by SME Corp. Malaysia

no later than 5.00 pm on 9 June 2017 at the following address:

Policy Monitoring & Inclusive Development Division

SME Corp. Malaysia

Level 7 Block C Platinum Sentral

Jalan Stesen Sentral 2

Kuala Lumpur Sentral

50470 Kuala Lumpur

10.2.1 Proposals including supporting documents received after the deadline for

any reason will not be accepted and will be returned to the Applicant

unopened. Furthermore, no Applicant will be permitted to make any

amendment or alteration of the Proposal after the deadline has passed.

10.3 Form of Submission

Applicants must submit six (6) signed copies of their Proposals, each

bound or stapled separately, all within a single, sealed envelope or

document box.

10.4 Additional Information

The Evaluation & Selection Committee reserves the right to contact any

Applicant for clarification of information submitted and to contact parties

with whom the Applicant has current or past business relations in order to

verify information submitted by the Applicant. An Applicant may also

submit any additional information or references the Applicant deems

favourable to support the Applicant's proposal.



10.5 Proposal / Proposal Validity

Proposal (s) should be valid for a period of 90 days from the closing date

for submission.

10.6 Clarification and Amendment of RFP Documents

Applicants may request clarification of any of the RFP documents up to 15

business days before the Proposal submission deadline. Any request for

clarification must be sent in writing, or by standard electronic means to

SME Corp. Malaysia at the address indicated herein for receipt of

Proposals. SME Corp. Malaysia will respond in writing, or by standard

electronic means and will send written copies of the response (including an

explanation of the query but without identifying the source of inquiry) to all

prospective Applicants. Should the Evaluation & Selection Committee

deem it necessary to amend the RFP as a result of a clarification, it will do

so following the procedure stated below. At any time before the submission

of Proposals, the Evaluation & Selection Committee may amend the RFP

by issuing an addendum in writing or by standard electronic means. The

addendum will be sent to all Applicants and will be binding upon them.

Applicants will acknowledge receipt of all amendments. To give Applicants

reasonable time in which to take an amendment into account in their

Proposals, the Evaluation & Selection Committee may, if the amendment is

substantial, extend the deadline for the submission of Proposals.

10.7 Confidentiality

10.7.1 All members of the Evaluation & Selection Committee, SME Partner, and

SME Corp. Malaysia will be required to sign confidentiality agreements

prohibiting the disclosure to other parties of any information submitted in

the Applicants’ Proposals or obtained in relation thereto.

10.7.1 Any due diligence performed in order to verify or clarify information

submitted by Applicants will be undertaken in writing directly by the

Evaluation & Selection Committee members or SME Corp. Malaysia in

order to further ensure confidentiality.

10.7.2 Information relating to the Evaluation & Selection Committee’s

assessment of the Proposals received will not be disclosed to Applicants or

other persons.



10.8 No Fees

No fees will be imposed upon Applicants in connection with the submission

and review of Proposals.

10.9 Fraud, Corruption and Standard of Care

The Applicant further accepts that in submitting this RFP proposal in the

expectation of a contract award the Applicant agrees to maintain a

relationship of trust and confidence with SIP and its representative, SME

Corp. Malaysia. The Applicant further agrees to perform its role as the

SME Partner by consistently observing the highest standards of

professional and ethical competence, integrity and diligence, using at least

the same degree of skill, judgment, diligence and care as the Applicant

would use if it were commercially operating, managing, investing and

overseeing the Applicant’s own capital.

10.10 Cost of Preparation of the Proposal

The costs of preparing the Proposal and of negotiating the contract, are not

reimbursable by the SME Corp. Malaysia or other parties related to the

issuance of this RFP and the appointment process.

10.11 Assignment and Sub-Contracting

An Applicant which is appointed as the SME Partner pursuant to this RFP

will not assign, transfer, pledge, hypothecate, sub-contract or otherwise

encumber its rights to receiving payments for managing the Fund under

the SIP Programme for any reason whatsoever without the consent of

SME Corp. Malaysia.

10.12 Dispute Resolution

Any dispute, controversy or claim arising from or related to this RFP and/or

an (envisaged) appointment, or a breach or invalidity thereof, which cannot

be amicably settled between the parties will be settled by arbitration. Once

the Fund Management Agreement is executed, disputes between SME

Partner and the SMEs will be governed by the Fund Management

Agreement.

10.13 Other Conditions of the RFP

10.13.1 All proposal submissions, exchanges, correspondence and documents

relating to the RFP process and the Agreements will be written in English.



10.13.2 All amendments, changes and modifications to the RFP will be sent to all

Applicants and will be binding on them. Applicants must acknowledge

receipt of all amendments by email to SME Corp. Malaysia. In order to

give Applicants reasonable time in which to take an amendment into

account in their Proposals, SME Corp. Malaysia may, if the amendment

is substantial, extend the deadline for the submission of Proposals.

10.14 Interviews and Negotiations

10.14.1 Interviews with short-listed Applicants will be held at the address

indicated by SME Corp. Malaysia, unless other arrangements are agreed

between the Applicant and SME Corp. Malaysia. The Evaluation &

Selection Committee will conduct the interviews with SME Corp. Malaysia

present should the Evaluation & Selection Committee request.

10.14.2 Negotiations with the winning Applicant will include a discussion on the

Proposal, the proposed operational work plan, and staffing. Special

attention will be paid to the use of the fund to maximise the benefits of the

SIP Programme.

10.14.3 Final negotiations with the appointed Applicant will also include a review

of the Required Investment Policies to maximally suit the purpose of the

SIP Programme. However, should the appointed Applicant persuade the

Evaluation & Selection Committee that any provisions of the Guidelines

undermine such objectives, such provisions may be changed by mutual

agreement between the Applicant and the Evaluation & Selection

Committee.

10.14.4 The negotiations will be concluded with a review of the draft form of the

contract. If negotiations fail, SME Corp. Malaysia will invite the firm

whose proposal received the second highest score to negotiate a

contract.



11 RFP RELATED QUESTIONS / CLARIFICATIONS / SUBMISSION

All questions related to this RFP should be directed to:

i) Nik Mohd Zainul Kamarun Nik Kamil ([email protected]) ii) Suraini Mohamad Sulaiman ([email protected])

Any notices with respect to this RFP should also be mailed to the following address:

Policy Monitoring & Inclusive Development Division SME Corp. Malaysia Level 7 Block C Platinum Sentral Jalan Stesen Sentral 2 Kuala Lumpur Sentral 50470 Kuala Lumpur

mailto:[email protected]

mailto:[email protected]