FashionValet founders step down, accept blame over RM44m loss

FashionValet’s founders stepped down and took full responsibility for the almost RM44 million loss suffered by Khazanah Nasional and Permodalan Nasional Bhd, which invested in the e-commerce platform.

Fashion entrepreneurs Vivy Yusof and her husband Fadzaruddin Shah Anuar apologised over the issue, explaining that they expanded their business too aggressively and did not sufficiently plan for a “rainy day”.

The couple said they invested heavily in their own technology stack, grew the team too quickly and added too many retail stores before the Covid-19 pandemic.

The duo admitted that they continued to curate a positive and hopeful face to the world despite the company’s troubles with the naïve thought that such a posture would instil confidence in their brand and products.

“Most of all, we are very sorry for the controversy this has caused Khazanah and PNB. They have always acted professionally and in the best interest of their organisations.

“We hope this disappointment does not become a deterrence, and they will continue to support other local entrepreneurs.

“Finally, we think it is time for us to step away from the business and relinquish our positions.

“We do not want the ensuing issues to further affect the company, considering that it is in the stages of a turnaround,” the two co-founders said in a media statement today.

‘Promising’ homegrown platform

In its own press release later today, Khazanah said it invested RM27 million to acquire a nine percent stake in FashionValet in 2018 when the firm was a promising homegrown e-commerce fashion platform.

Khazanah noted that the company faced challenges over the years, which were made worse by the Covid-19 pandemic, and faced a difficult fund-raising environment from 2022 to last year.

Khazanah said it then accepted an offer by NXBT Partners to acquire its stake to help the e-platform chart a new growth trajectory.

“We believe that the start-up ecosystem is a vital engine for innovation, economic growth and job creation in Malaysia.

“Despite the higher inherent investment risks and challenges with early-stage companies, Khazanah is fully dedicated to supporting local start-ups and will continue to promote their success and expansion,” it said.

Three days ago, in a written parliamentary reply, the Finance Ministry said Khazanah and PNB’s share value in FashionValet had dropped by almost RM44 million when the business was sold last year, compared to how much they spent in 2018.

The ministry stated that Khazanah invested RM27 million and PNB RM20 million in 2018 to acquire a minority stake in the local fashion brand.

It was part of a gambit to boost bumiputera businesses in the e-commerce sector.

However, the ministry said FashionValet was then severely affected by the Covid-19 pandemic and fundraising troubles.

This is despite the Covid-19 pandemic being a major boon for e-commerce businesses.

Yesterday, government spokesperson Fahmi Fadzil said Khazanah and PNB should promptly address public concerns over the loss-making transaction.

Fahmi: Khazanah, PNB should explain FashionValet deal

Khazanah, PNB sold RM47m stake in FashionValet for RM3.1m