KUALA LUMPUR: Small and Medium Enterprises Association of Malaysia (Samenta) suggests that the government set up an SME Vision Fund, to be anchored by government-linked companies (GLCs), with an initial funding of RM 1 billion to help SMEs with their financing needs.
Samenta national president Datuk William Ng said the fund can be used to invest in new IPOs, with a ticket size of between RM 50,000 and RM 1 million, based on criteria to be decided by the fund managers.
"This will create greater confidence among the 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," he added in a statement following the launch of the Securities Commission's five-year roadmap to help small and medium enterprises (SMEs) and mid-tier companies raise RM 40 billion from the capital market by 2028.
Ng said by popularising and empowering equity crowdfunding (ECF), SMEs will have the option to secure working capital financing at a relatively shorter time frame.
Similarly, he added that many larger SMEs find that the time horizon for financing or even the ticket size offered by traditional financial institutions differ from their own requirements.
"Through an initial public offering (IPO), a SME could raise funds from investors that traditional financing channels are unlikely to offer," he said.
Meanwhile, Ng said the association also welcomes the Securities Commission's commitment to raising the liquidity and valuation of listed SMEs, especially in the LEAP market.
He said liquidity and poor valuation remain a major stumbling block for SMEs who are considering listing on Bursa Malaysia.
"This is stopping otherwise highly profitable companies from getting listed, while those who are listed are stuck with illiquid stocks and low valuation.
"This is why many SMEs choose the trade sale route, as it is far cheaper, and often commands better valuation than getting listed," he said.
Ng added that regardless the debt or equity financing options, SMEs will need to practice the mantra of 'document, document, document'.
He said many SMEs fail to raise money because their records are either incomplete or are too complicated for the financiers and investors to consider.