SME group proposes RM1bil fund to invest in IPOs

 

Samenta president William Ng said SMEs find traditional financing to be time-consuming in terms of application, approval lead-time, and even in disbursement. (Bernama pic)

PETALING JAYA: A business group has called on the government to establish a fund anchored by government-linked companies (GLCs) to be used to invest in new initial public offerings (IPOs).

The Small and Medium Enterprises Association of Malaysia (Samenta) today mooted the idea of a “SME Vision Fund” with an initial funding of RM1 billion and a ticket size of RM50,000 up to RM1 million based on criteria to be decided by the fund’s managers.

“This will create greater confidence among SMEs to get listed as it could mean better price discovery and valuation, while giving participating fund partners the opportunity to tap into the SME sector,” said Samenta president William Ng.

“Through an IPO, an SME could raise funds from investors that traditional financing channels are unlikely to offer.”

Ng said while Malaysia’s business financing ecosystem is highly sophisticated, there are gaps in it that can be fulfilled through the capital market.

He also pointed out how many SMEs find traditional financing to be time-consuming in terms of application, approval lead-time, and even in disbursements.

In a statement, Ng said Samenta also welcomes the Securities Commission’s commitment to raising the liquidity and valuation of listed SMEs, especially in the LEAP market.

He noted that illiquidity and poor valuation remain a major stumbling block for SMEs who are considering listing on Bursa Malaysia, which is stopping otherwise highly profitable companies from getting listed.

He was responding to the five-year roadmap for micro, small and medium enterprises (MSME) and mid-tier companies (MTCs) which the SC unveiled earlier today in a bid to better position the capital market as an attractive and robust source of financing for such firms.

The roadmap envisages the capital market serving the growing financial needs of these companies, potentially up to RM40 billion in 2028 (from RM6.3 billion in 2023), by complementing conventional financing avenues.

SC chairman Awang Adek Hussin said the roadmap reinforces the Malaysian capital market’s commitment to support the financing needs of MSMEs and MTCs by mobilising listing grants and guarantees, leveraging capital market touchpoints, and boosting MSMEs and MTCs’ readiness.

SC also said the roadmap will complement and support existing national development policies, including the Madani economic framework, the 12th Malaysia Plan, the New Industrial Master Plan 2030, and the National Energy Transition Roadmap.

In his speech during today’s launch of the roadmap, second finance minister Amir Hamzah Azizan highlighted the importance of MSMEs and MTCs to the economy and emphasised the need for strategic collaboration among key stakeholders in meeting this segment’s financing needs.

MSMEs contribute about 38.4% of Malaysia’s GDP and 48.2% of total employment in 2022. There are about 8,500 MTCs, accounting for around 36% of GDP and 16% of the workforce. - FMT