• LEAP offers SMEs access to capital market

In terms of listings on the local bourse, while better than last year, 2017 is set to be yet another laggard year for the number of IPOs as compared with its performance half a decade ago.

At the time of writing, only 11 new listings have been recorded so far this year. Nevertheless, a handful of listings are expected to occur before the end of this year, driven by the recovery of sentiments in Malaysia’s economy as well as Bursa Malaysia’s efforts to improve its IPO pipeline.

In addition, IPOs raised this year have been far better than 2016, as a total of RM7.4 billion IPOs have been raised within 9M17 compared with RM0.5 billion recorded in the same period last year.

In a bid to further spur the number of listings this year, Bursa Malaysia launched a new board called the ‘Leading Entrepreneur Accelerator Platform (LEAP)’, or the LEAP Market, which went live just last month.

With the support of its partners Malaysia Digital Economy Corporation (MDEC), Malaysian Technology Development Corporation (MTDC), SME Corporation and the Bumiputera Agenda Steering Unit (TERAJU), this third new board was developed as an alternative fund-raising platform which offers the chance for small and medium enterprises (SMEs) to raise funds from the capital market for their business expansion.

In other words, Bursa Malaysia is offering the opportunity for companies that are too small for the Main Market or ACE Market, to trade on the stock exchange via the LEAP Market board.

“The LEAP Market is an alternative capital raising platform for SMEs which is the first of its kind in Asean. It is designed to address the funding gap for SMEs and make it easier for them to take their businesses to the next level through raising funds in the capital market. It also provides investors with a new investable asset class.

“The availability of such a platform would further aid the development of SMEs and support broader economic activities,” said

Tajuddin Atan, during the launch of the new board.

Subtitle: Giving a platform for SMEs to grow

In its Annual Report for 2016-2017, SME Corp viewed this new market favourably as it further recognises the importance of SMEs and their significant contribution to the country’s gross domestic product (GDP).

To note, SMEs’ contribution to the economy to date stands at 36.9 per cent. This was why Bursa Malaysia hoped to attract the most promising small companies to list their shares.

“As the start-ups and small businesses grow, some of them would eventually move up to the bigger boards on Bursa Malaysia.

“While SMEs can still choose to get listed on the ACE Market, the LEAP Market offers several advantages. It has been formulated as a sponsor-driven market which is regulated on a ‘lighttouch’ basis, but balanced by prudential standards.

“Bursa Malaysia is cutting the red tape and regulatory burden to lower the entry barrier for cost-conscious smaller businesses,” it said.

The LEAP Market equivalents can be found in several countries such as South Korea, Taiwan, China and India. However, Bursa Malaysia is the first Asean stock exchange to launch such market.

In the LEAP Market, Bursa Malaysia’s approved advisers will play a more active role in identifying the companies to be listed and guiding them through their journey as a listed company.

In the Main and ACE Markets of Bursa Malaysia, the advisers are restricted to only investment banks and certain securities firms.

However, the LEAP Market expands the number of advisers to other firms which hold Corporate Finance Adviser ( FA) licenses regulated by the Securities Commission (SC), such as boutique advisory firms.

The approved advisers to this market include Kenanga Investment Bank Bhd, M&A Securities Sdn Bhd, Mercury Securities Sdn Bhd, TA Securities Holdings Bhd, Crowe Horwath Advisory Sdn Bhd, DWA Advisory Sdn Bhd, WYNCorp Advisory Sdn Bhd, and many more.

During its launch, it was announced that 11 companies showed interest in listing on the LEAP Market. Within the last two months, two companies have made their debut on the LEAP Market; namely Cloudaron Pte Ltd and Red Ideas Holdings Sdn Bhd.

For investors, due to the risk involved in investing on young companies, the LEAP Market is intended for more sophisticated investors or high net-worth entities or individuals.

However, it opens the opportunity for these investors to broaden their investment options in a transparent and regulated environment.

The LEAP Market also offers the possibility for sophisticated investors to stay ahead by investing on a company on the LEAP Market that could eventually succeed and make its way onto the ACE or Main Market.