KUALA LUMPUR: There is an estimated RM90 billion financing gap among micro SMEs (MSMEs) and the Securities Commission (SC) aims to narrow this under its third Capital Market Masterplan (CMP3).
The SC said with CMP3, it would be more facilitative at specific segments of the business growth cycle to scale them up.
"Private market space is indeed an area of focus for CMP3. Hopefully we'll be able to leverage the foundation we have built and expand further, making it more relevant to their needs," the SC told the media during the masterplan's virtual technical briefing on Monday.
The SC said it had laid the foundation for equity crowdfunding and peer-to-peer financing framework four years ago.
To date, the alternative financing channels have provided over RM2 billion of financing to over 3,800 companies.
"We realised that to enable more deal flows, it needs to happen at the earlier stage and there is a need to widen that investor base, as building a pipeline of quality startups needs to start at the seed stage," it said.
The capital market regulator is looking into opening up the early phase of the growth cycle to angel investors who have higher risk appetites.
The commission will assess the limits, incentives and structures to allow them to come together with a lead angel investor at the structure.
The SC is also assessing models and platforms for angel investors to network with a group of investors to get them to participate in such deals.
In the years to come, the SC believes the market will no longer be a one size fits all situation. Instead, there will be segments, products and service providers that cater to different needs.
"We would like to think the foundation we laid here will be able to expand and cater to those needs, in the case of MSMEs their financing needs are being catered to," it said.
For the upcoming masterplan, the SC will be looking to facilitate businesses in their path towards sustainability through transition financing.
This will enable businesses to raise funds to support activities that will eventually move them closer to achieving their net zero targets or better sustainability practices.
CMP3, which was unveiled today, will be for a period of five years compared to the 10 years of CMP1 and CMP2.
The SC said the introduction was timely given the accelerated move towards sustainability agenda globally.
"We hope this will create more opportunities, platforms and products for businesses to tap on and attract investors focused on sustainable investing via transition financing.
"Simultaneously, we hope to match the needs of businesses and investors looking to invest more responsibly and sustainability," it added.