Leading Entrepreneur Accelerator Platform (Leap) Market
Bursa Malaysia’s Leading Entrepreneur Accelerator Platform (Leap) Market was officially launched on 25 July 2017 as an alternative efficient funding platform for SMEs. In Malaysia, SMEs currently represent 97% of businesses establishments and accounts for more than 52% of total employment.
At present, SMEs in Malaysia are too reliant on financing from banks which makes up almost 96% of their funding, with just 4% from capital market. This has limited their growth and business expansion due to the need for security back-ups, where financing from banks are concerned, which has often deterred SMEs especially those which are service base with lack of tangible assets back up from obtaining funds to enhance their business activities.
Lower barrier of entry
The LEAP Market is Malaysia’s third capital market in addition to the Main Market and ACE Market. The key benefits of the LEAP Market compared to the other two are:-
- Cost Effectiveness
- Based on data between 2012 to 2015, the average cost of raising capital from the initial two Markets range from RM2 million to RM3 million. It will now be much lower with the LEAP Market, which is estimated to be below RM1 million mainly due to the lower barrier of entry.
- Limited financial disclosures and no profitability track records are required.
- E.g. prospectus is not required, etc.
- Waiver of Initial Listing and Processing Fees
- For those listing on the LEAP market, if they graduate within three years to list on the ACE market, the initial fee and processing fee for the listing will be waived.
- A funding platform for all industries
- The LEAP market is open to all industries ranging from manufacturing, trading, property developers, services, etc. as long as they display good potential for business growth
The LEAP Market acts as a springboard for SMEs with plans for listing but not necessarily fulfilling the listing criteria which requires funding for business expansion. It provides a path for SMEs to enter the capital market and lay the foundations for future listing on the ACE or the Main Market once they have fulfilled the listing conditions.
A Platform for Businesses To Move Up To A Higher Level
Listing provides businesses with not just a funding platform, but also allows business owners to grant ESOS (employee share option scheme) to their employees which is a great way to reward excellent and committed performers for their invaluable contribution to the growth of their organisation.
Companies embarking on Mergers and acquisitions too will realise the benefits of being listed on the LEAP market as they will be able to offer shares instead of paying cash in full, in their bid to acquire another company. This creates greater synergy for the business and makes business expansion a lot easier.
Considerations for investment decisions
With the LEAP Market limited to just sophisticated investors, it raises some concerns on the illiquidity which is likely due to the absence of the general market. But the plus point is, sophisticated investors are largely sound investors and their investment decisions may not necessarily be influenced by market sentiments. If they are convinced of a company’s potential and stability, they are unlikely to divest their equity.
Investment decisions are normally made after thorough evaluation and consideration of key factors that highlight the potential of a company, such as:
- Business models and financial performances, which includes profitability and liquidity or cash flow
- Market positioning and word of mouth, especially from customers / clients
- Overall experience and capabilities of the management and operation teams
- Internal control and corporate governance
- Vision, future plans and projects undertaken
- Competitive edge in the industry.
If SMEs, with ambitions to enter the LEAP Market, are able to successfully address these factors, it is firmly believed that they are on track to achieve listing success.
