Short Positions - Tech Push


  • Corporate News
  • Saturday, 22 Aug 2020

Not taking a Leap

POLYMER Links Bhd, a company that is into the business of developing and manufacturing compounded and non-compounded plastic powder, is seeking to withdraw its listing from the Leading Entreprenuer Accelerator Platform (Leap) market.

The company citied two reasons for the proposed withdrawal. Firstly, it was to streamline the business operations and restructure the entities within the group to realise the growth potential.

The second reason is the relatively low liquidity of its shares hinders the company’s ability to raise funds. Hence, a listing does not serve any purpose.

In relation to its withdrawal, the company had said that the promoters that control just above 90% of the company and four minority shareholders have agreed to the withdrawal of Polymer Link’s listing on the Leap market.

Liquidity has always been a key issue with companies listing on the Leap market, which was set up by Bursa Malaysia as another alternative for companies seeking to raise funds.

The essence of the Leap Market is for the promoters of the company to get their own investors, raise some money and use the proceeds to grow the business for it to eventually be listed on the main board.

The drawback is the promoters can only tap into investors who are high net worth individuals. It’s because there are underwriting agreements or investment banks acting as sponsors to give any kind of comfort for investors.

Even to trade on shares in the Leap market, one needs to sign off a declaration to state that they are a high net worth individual and is aware of the risk involved in investing in the companies.

How many would want to sign off as high-net worth individuals and attract the attention of the taxman? Certainly, the numbers are few.

In a time when Bursa Malaysia is chalking up record volumes in trading that is largely dominated by retail, the activity in the Leap market is relatively quiet.

There are 34 companies listed on the Leap market and it would not be a surprise if more companies follow the footsteps of Polymer Links.

A listing is to raise funds to finance growth and find a market-driven valuation for the company.If the objectives cannot be met, a de-listing is the best option.

Tech push

THE government’s statement this week, that the only way for Malaysia to become a high-income nation is to become a high-tech country is spot on. Prime Minister Tan Sri Muhyiddin Yassin said this during the launch of the National Technology and Innovation Sandbox (NTIS) and compared Malaysia with countries like Taiwan and South Korea, who have leaped over Malaysia in terms of economic growth since the Second World War, primarily due to their mastery of technology.

The NTIS will be a platform for entrepreneurs to operate within a sandbox to use cutting edge technology to solve some of Malaysia’s challenges such as an over dependence on foreign labour, food security risks and the digital divide.

A total of RM100mil is being allocated to entrepreneurs planning to participate in the sandbox.

Credit to the government’s vision on promoting technology this way.

Hopefully, the government will learn from past lessons, where billions of ringgit were spent to push the technology agenda with outcomes that did not achieve the targeted results.

Investing in technology is not an easy task which is why the best brains are usually hard at work managing venture capital funds. Budding entrepreneurs will tell you how onerous the milestones that venture capitalists impose on them after making their investments.

Secondly, another area that needs to be addressed is how this technology is going to be applied in the market.

There will need to be some initiatives for local products to get market acceptance, considering that many foreign big players have bigger pockets to fight local competition. Malaysian organisations also tend to have little trust in home- grown technology and this perception needs to be addressed.

Incidentally, the market awaits with bated breath on earlier announced plans for an artificial intelligence park that had been earlier mooted. Private sector initiatives like those would be good to boost local usage and experimentation of AI, which is crucial for all corporations to maintain their competitiveness in the future.

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Short Position , Technology , Polymer Links Bhd , NTTS ,

   

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