Mlabs IPO a precedent for varsities

THE listing of MLABS Systems Bhd, a company that began in the laboratories in Universiti Sains Malaysia (USM) in Penang, will be a boost for the corporate arm of the university and the prospects of commercialising research done in some of the country's leading centres of knowledge. 

Usains Holdings Sdn Bhd group managing director Datuk Dr Gan Ee Kiang said in an interview: “Because we have been seen to be able to develop a product to an IPO (initial public offering) stage, people will have more trust in us.'' Usains is the corporate arm of USM and was launched in 1999. 

He expects two or three companies that have had work done with Usains to be listed over the next three years. 

Datuk Dr Gan Ee Kiang

Usains was formed as an answer to the Government's call in the mid-1990s for universities to commercialise their research and development (R&D) and prevent brain drain. 

Gan said he spent two to three years trying to structure such an entity and the result was Usains, which is wholly owned by USM. Usains' job is to market the university's services and expertise, commercialise R&D results, sell intellectual work and turn them into commercialised products. 

While Usains has worked with listed companies to develop or improve their products, Gan believes Mlabs is arguably the first technology spin-off from a university in Malaysia to be listed on Bursa Malaysia. 

“Sures was a lecturer who did a thesis on video conferencing and he saw the potential. He nurtured the company and worked hand in hand with Usains,'' said Gan, referring to the work of Dr Sureswaran Ramadass, who is an associate professor at USM and chairman of Mlabs. 

“This is a classic example how commercialisation can be made with a corporate entity helping them,'' said Gan. 

He said Mlabs was able to head to Bursa Malaysia, thanks to the people behind the company. “Suresh is energetic and believes in himself,'' said Gan, when asked why Mlabs was the first spin-off and not some other company. 

The public tranche of Mlabs' IPO has been oversubscribed 13.83 times. Mlabs' public issue involves 26.15 million new shares at an issue price of 55 sen each. Usains owns 4.8% of Mlabs. 

Work put into the commercialisation of Mlabs and other jobs led to Usains chalking up a revenue of RM11.4mil for its 2004 financial year. Total value for USM alone was RM15.4mil, which translated into an income of RM3.82mil for the university. Total honorarium paid to USM staff was RM5.35mil. 

“Each year, Usains gets jobs from over 700 clients and they include multinational corporations,'' said Gan, adding that Usains' strength was in life sciences, engineering, food science and information technology.  

Gan said Usains has a core staff of 25, comprising lawyers and finance and marketing personnel. He said having such permanent staff enabled researchers to concentrate on what they did best. Researchers are tapped from the university, which boasts a faculty of over 1,000 PhD holders. 

Gan said lecturers were allowed to work just one day a week for Usains so that their teaching would not be affected. He said some of the professors could earn the equivalent of one year's basic salary as extra income for work done for Usains. 

“By interacting with the industry, a lecturer would learn more about the industry and its problems. That is a plus point when they incorporate such knowledge in their lectures,'' he said. 

And Gan believes the more success Usains achieves, the more universities from the rest of the country would try to emulate what is being done in Penang. 

“A lot of universities are visiting us and we think Usains is a workable model for the universities,'' said Gan, who added that two key reasons for Usains' success were limited interference and financial independence. 

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