SC managing director Datin Azalina Adham.
KUALA LUMPUR: Despite the high number of initial public offering (IPO) listings on Bursa Malaysia, only a few micro, small and medium enterprises (MSMEs) tend to seek funding from the capital market.
This was the findings by the Securities Commission (SC) as it noted that most of the companies are prevented from doing so due to the lack of information.
“They usually go to the banks first when they need to raise funds. Only 2% of Malaysian companies’ funding needs are done using the capital market.
“The rest of the funding needs are from borrowings,” SC managing director Datin Azalina Adham told StarBiz on the sidelines of the Securities Industry Development Corp business foresight forum 2024 here yesterday.
“They are more traditional. But the banking route is expensive and a lot of MSMEs had complained that they couldn’t get banking facilities as there are requirements to collateralise their assets,” she added.
Azalina said the capital market could cater to the funding needs through the various platforms including peer-to-peer lending platforms, equity crowdfunding platforms and the LEAP Market on the Bursa Malaysia.
“We are going to structurally make some changes to the LEAP Market – we have already widened the investor base – so to be a sophisticated investor, it means having money as well as knowledge.
“There is a category to say that if you have worked for a number of years, you can be considered a sophisticated investor and thus you can invest in the LEAP Market,” she said.
The SC is also in the process of widening the pool of advisers from investment banks and special advisers to include audit advisory firms and legal firms.
The regulator is also encouraging people to look at non-profit type of matrix for such listings which include the IPO prospects sales or market share growth as well as cashflow management which could indicate how the company is doing, Azalina added.
She said investors should not be plainly looking at profit and loss statements of some of the MSMEs.
The SC had recently launched a comprehensive five-year roadmap to catalyse access to capital market financing for MSMEs and mid-tier companies (MTCs).
The roadmap aims to grow the MSME and MTC capital market by seven times, from RM6.3bil in 2023 to RM40bil in 2028.
