NAVIGATING THE IPO TERRAIN

I have been repeatedly asked this question as a Corporate Research & Strategic Development Consultant. How do we navigate the IPO terrain in Malaysia? For the ease of understanding I have included in this article the different paths to listing your company and the inclusion of the timelines involved in an IPO process and the roles of the different personals involved.

Companies have several options for listing on the stock exchange. The main stock exchange in the country is Bursa Malaysia.

There are different paths to listing in Bursa Malaysia. 

Initial Public Offering (IPO) - The initial Public offering is the the most common method for companies to go public in Malaysia. It involves the sale of new or existing shares to the public for the first time. The company needs to meet the listing requirements set by Bursa Malaysia, including financial performance, track record, and corporate governance standards. Companies usually work with investment banks as underwriters to help with the IPO process, including pricing, marketing, and regulatory compliance.

Listing by Introduction - Listing by introduction is an alternative to an IPO, where a company becomes publicly traded without raising capital through a public offering. In this method, the company's existing shares are listed on the stock exchange without any additional issuance. This is common when a company is already widely held. 

Listing by way of Transfer - This method involves transferring the listing status of a company from one market to another within Bursa Malaysia. For example, a company listed on the ACE Market may transfer to the Main Market to gain access to a larger pool of investors.

Qualifying Acquisition -  For special purpose acquisition companies (SPACs), a qualifying acquisition involves acquiring an existing business that meets certain criteria, allowing the SPAC to list on the stock exchange.

Reverse Takeover (RTO) - In a reverse takeover, a private company acquires a publicly listed company. The private company effectively takes control of the publicly listed entity, and its shares become the traded securities. This method can be a faster way for a private company to gain a listing.

Special Purpose Acquisition Company (SPAC) - A SPAC is a company formed for the purpose of acquiring another company. It goes public first, raising funds through an IPO, and then looks for a private company to acquire. Once a suitable acquisition target is found, the SPAC merges with the target, and the combined entity becomes publicly traded.

Real Estate Investment Trusts (REITs) - REITs are listed entities that own and operate income-generating real estate. These trusts allow investors to participate in real estate investments without directly owning the properties. REITs can be listed on the Main Market of Bursa Malaysia.

Exchange Traded Funds (ETFs) - ETFs are investment funds that are traded on stock exchanges, and they can include a variety of assets like stocks, bonds, or commodities. ETFs can be listed on Bursa Malaysia, providing investors with diversified exposure to a particular market or sector.

Before pursuing any of these methods, companies should thoroughly assess their financial readiness, comply with regulatory requirements, and seek professional advice to ensure a smooth listing process. Each method has its own set of considerations and requirements, and the choice depends on the company's specific circumstances and objectives.

IPO

Now moving on to the actual topic on navigating the IPO terrain in Malaysia. Bringing a company to the public sphere through an Initial Public Offering (IPO) in Malaysia is a strategic move that requires meticulous planning, expert guidance, and collaboration among various professionals. I will provide an in-depth roadmap, complete with timelines, for IPO preparation, investor sourcing, and highlight the pivotal roles played by different personnel, including underwriters and introducers.

IPO Preparation Timeline

• Months 18-12 Before IPO: Financial and Legal Advisors Take Center Stage

• Financial Advisors: Collaborate with financial experts to conduct a thorough financial audit and prepare audited financial statements, ensuring compliance with Malaysian regulatory standards.

• Legal Counsel: Engage legal advisors to navigate the regulatory landscape, addressing the requirements set forth by the Securities Commission Malaysia (SC) and Bursa Malaysia.

• Months 12-6 Before IPO: Operations Team and Compliance Officers in Focus

• Operations Team: Streamline operations, enhance transparency, and fortify internal controls under the guidance of dedicated teams.

• Compliance Officers: Ensure adherence to regulatory standards, corporate governance, and internal controls.

Investor Sourcing Timeline

• Months 12-6 Before IPO: Collaboration with Investment Banks and Investor Relations Teams

• Investment Banks: Establish collaborations with investment banks to identify potential institutional investors and underwriters.

• Investor Relations Team: Develop a comprehensive strategy for engaging institutional investors, including the planning of roadshows and presentations to showcase the company's potential.

• Months 6-3 Before IPO: Targeting Retail and International Investors with Marketing and International Relations Teams

• Marketing Team: Collaborate with the marketing team to develop strategies for engaging retail investors through various channels.

• International Relations Specialists: Engage professionals with expertise in international investor relations to broaden outreach beyond Malaysian borders.

The Roles of Key Personne

• Underwriters (Months 12-6 Before IPO)

• Collaborate with Underwriters: Establish a relationship with underwriters who play a critical role in managing the underwriting process, ensuring a successful IPO.

• Due Diligence Team: Work closely with underwriters to conduct due diligence, verifying the company's financial health and regulatory compliance.

• Introducers (Ongoing and Months 6-3 Before IPO)

• Building Relationships: Develop relationships with introducers who possess a robust network in Malaysia's financial landscape.

• Facilitating Communication: Leverage introducers to facilitate effective communication and negotiations between the company and potential investors.

Successfully navigating the IPO landscape in Malaysia is a collective effort that involves a synergy of expertise from various professionals. By adhering to the suggested timelines and actively engaging key personnel such as financial advisors, legal counsel, underwriters, and introducers, companies can enhance their prospects of a seamless transition to becoming a publicly traded entity. In Malaysia's dynamic market, where regulatory compliance and investor relations are paramount, assembling a skilled and dedicated team is crucial for a successful IPO.