Recent new enhancements to its market boards have boosted the attractiveness of equity financing making it an opportune time for local businesses to explore equity funding. — Bernama photo
KUCHING (April 24): Bursa Malaysia Securities Bhd (Bursa Malaysia) believes that now is an opportune time to spread awareness among local companies, especially those in East Malaysia on enhanced opportunities to raise funds via the equity capital market.
In an interview with The Borneo Post, the securities market highlighted that the fact that Malaysian companies have continue to list successfully on the bourse despite recent challenges in economic recovery, global geopolitical concerns, supply chain disruptions, and fears of market recession demonstrates resilient demand and need for equity financing in the local economy.
“We believe that it is an opportune time to raise such awareness among companies in Sabah and Sarawak, as well as Peninsular Malaysia, where business owners might not have the necessary knowledge or understanding of what the equity capital market has to offer,” it shared.
The local bourse said that recent new enhancements to its market boards have boosted the attractiveness of equity financing making it an opportune time for local businesses to explore equity funding.
In that regard, Bursa Malaysia has been actively increasing their efforts in creating awareness on Initial Public Offerings (IPOs) as an option for fund raising, especially among Small Medium Enterprises (SMEs) which make up 97.2 per cent of total business establishments within the country.
“And based on the time we have spent in East Malaysia, we believe there are many potential SMEs in East Malaysia as well as more established businesses that can consider listing on Bursa Malaysia,” it added.
The availability of three markets on Bursa Malaysia, namely the LEAP, ACE and Main market boards, is also expected to be an attractive driver for local businesses as Bursa Malaysia guides business owners would a choice in terms of which market they can list on based on their level of development and maturity.
“We hope SMEs out there will consider listing on our Exchange not just as a means to raise funding for growth but also as a platform to elevate their profile. Our markets are facilitative of companies in different growth phases to list on the Exchange, such as the LEAP Market that would be able to accommodate SMEs from East Malaysia to raise funds to grow their business further,” the bourse shared.
This statement from the local bourse was made following the recent introduction of a new transfer listing framework from LEAP to ACE market.
The new framework, which came in effect April 1, was conceptualised to provide eligible LEAP market listed companies a clearer view how they can graduate onto the ACE market and what requirements it has to meet.
To further complement this, the exchange also introduced enhancements to the broader ecosystem by allowing Approved Advisers in the ACE Market to expand their capabilities to offer additional advisory services.
“These Approved Advisers were previously limited to undertaking IPO advisory mandates strictly for the LEAP Market. This crucial step allows Approved Advisers to build capacity and further improve the scope and quality of services offered by corporate finance practitioners, enabling them to continue to support the very companies they helped to nurture on the LEAP Market,” the local bourse explained.
The two new frameworks is not only expected to drive more listings onto the ACE market but also new listings onto the LEAP market.
“We believe that the introduction of the transfer framework and the Recognised Approved Adviser Framework represents major enhancements to what the LEAP Market has to offer, as it creates a clear path for a SME that are listed on the LEAP Market to gain access to a larger pool of investors by transferring to the ACE Market, enhancing their profile and visibility as a public listed entity,” Bursa Malaysia mused.
While the goal of the new frameworks is to encourage current and future LEAP listed companies to graduate to the ACE Market in order to access a larger pool of investors and take their business to the next level, Bursa Malaysia maintains that the LEAP market is still a highly crucial to the equity capital market.
“We believe the LEAP Market has and continues to play its role in supporting smaller companies in their early stages of growth as an alternative avenue of fundraising for SMEs. It is the only platform to raise funds that bring together potential SMEs, intermediaries as well as sophisticated investors, and provides for an efficient and transparent means to raise capital,” guided the local bourse.
Launched in 2017, the LEAP Market was conceptualised as a platform for SMEs to raise funding via the capital market while also enhancing their profile and visibility.
The market board was designed to address the funding gap for SMEs who typically faced challenges in obtaining funding, especially through conventional borrowings. Its framework allowed SMEs access to a lower cost of listing and speedier time to markets through a light touch regulatory regime.
Meanwhile the ACE Market which has stricter compliance regulations offers a more robust listing environment and potentially higher trading liquidity as compared to the LEAP Market, given the presence of a broader pool of investors.
“Within a few years of launching the LEAP Market, many LEAP listed companies quickly grew to become profitable and similarly, achieve size and scale. Consequently, we observed these LEAP listed companies could potentially explore migrating to the ACE Market,”Bursa Malaysia shared.
For the Main market, a total of 44 East Malaysian companies have listed with a combined total market capitalisation of RM21.40 billion.