Professional Documents
Culture Documents
Malaysia
Lecture Objectives
• Understand the venture capital market and
its role in financing new businesses
• Understand how securities are sold to the
public and the role of investment bankers
• Understand initial public offerings and the
costs of going public
Venture Capital
• First form in Malaysia in 1980s
• In a nutshell “risk money”
• No collateral, little or no control over
management of company, but high return
• Typically equity based, i.e., takes a percentage
of the equity in the company
• Capital gains when investee company get listed
• Not only mere providers of capital, but provide
guidance, management assistance and
networking
Difference between VC and
Debt Financing
VC DF
Collateral No Yes
• Seed
• Startup
• Growth/expansion
• Mezzanine/Pre- IPO
• IPO/Public
Why is Venture Capital
Needed?
• During the early stage of company growth
a company may still be developing its
products, thus sales is limited
• Also due to lack of tangible, bankable
assets and a reliable track record,
financing will be difficult
• VC funds are geared towards funding
high-risk early stage companies that have
high growth potential
Who are the Venture
Capitalists?
• A pool of investors
• Malaysian Venture Capitalist Association
with 44 membership companies
Selling Securities or Going Public
• Efficient and cost-effective way to raise
funds (interest-free)
• Reasons for Going Public:
Higher profile – greater visibility
Confidence – reputation and credibility are
enhanced
Additional funds and potential to raise more
funds – once company is well-managed and
displays strong responsibility
Expansion – able to expand overseas, more
publicity on their activities
PROCEDURES FOR INITIAL
LISTING
• Getting approval for listing from Securities
Commission
• Submit articles of association to KLSE
• Applicant:-
– issues prospectus if it is a public offer of securities
– advertises the prospectus
• Applicant files with KLSE a listing application
together with supporting document.
• Exchange grants approval-in-principal for the
admission of securities.
MAIN BOARD LISTING
REQUIREMENT
• Min. paid-up capital - RM60 million, comprising
ordinary shares of not less than 10 sen each.
• At least 25% of issued and paid up capital at
time of listing shall be in the hands of public
shareholders
• Fulfil public spread requirements
• Historical performance – uninterrupted after-tax
profit record for the past 3 – 5 years, total of
RM30 mil, and RM8 for most recent financial
year.
Requirement of min. public
shareholdings
Nominal value of issued Min. number of
and paid-up capital shareholders
RM40 mil < RM60 mil 750