The Securities Commission Malaysia (SC) said Monday it will soon launch a five-year micro, small and medium enterprises (MSME) Roadmap, which aims to provide increased access to the capital market for MSMEs.
SC said in a statement that the SC is also reviewing the regulatory framework governing fund raising by unlisted public companies (UPCs).
The SC also remains committed to advancing Malaysia’s capital market and supporting its transition towards a low-carbon economy.
It is also looking to refine the sustainable and responsible investment (SRI) Taxonomy and develop the National Sustainability Reporting Framework to guide industry participants towards aligning with global sustainability standards.
According to the statement, alternative financing activities posted an encouraging growth and continued to support the funding needs of MSMEs, with total funds raised amounting to MYR 3.8 billion ($800 million), up from MYR 3 billion ($630 million) in 2022.
Equity crowdfunding (ECF) and peer-to-peer financing (P2P) platforms have allowed over 15,000 MSMEs to raise more than MYR 6 billion ($1.27 billion) since inception.
According to its annual report, total committed funds in the venture capital and private equity as at the end of 2023 stood at MYR 11 billion ($2.32 billion) and MYR 6.58 billion (MYR 1.39 billion) for private equity and venture capital respectively, with a combined total of MYR 17.58 billion ($3.71 billion).
For private equity, commitments are sourced largely from corporate investors (32.36 percent), individuals and family offices (19.45 percent), and financial institutions (12.88 percent).
For venture capital, government agencies and investment companies (38.62 percent), sovereign wealth funds (22.55 percent) and corporate investors (19.73 percent) make up the top three sources of funding.
The top three registered corporations by amount of investor commitments as at end 2023 were Creador, Xeraya Capital and Malaysia Venture Capital Management Bhd (MAVCAP).
Venture capital investments in 2023 concentrated on growth (56.63 percent), followed by early stage (26.25 percent) and seed (7.73 percent) opportunities.
Private equity investments were primarily channeled into growth plays (77.20 percent), with some investments made to early stage opportunities (16.71 percent), followed by buyouts (3.14 percent).
In total, 62 venture capital and 25 private equity deals were recorded in 2023.
In terms of target industries, financial services (18.12 percent) saw the highest share of venture capital investment in 2023, followed by wholesale and retail trade (13.55 percent), and life sciences (12.97 percent).
As for private equity, investments were largely channeled to business services (45.06 percent) in 2023, followed by wholesale and retail trade (35.15 percent) and transportation and storage (4.28 percent).
Divestments during 2023 were mainly exits in the growth stage for both venture capital and private equity segments.
Exits in 2023 were primarily through initial public offering (IPO) or sale to public markets and trade sales.
Meanwhile, of the total number of registered corporations of 137 as at December 31, 2023, the venture capital segment accounted for 113 registered venture capital management corporations (VCMCs) and venture capital corporations (VCCs), while the private equity segment consisted of 24 registered private equity management corporations (PEMCs) and private equity corporations (PECs).
On equity crowdfunding (ECF), the total funds raised in 2023 decreased to MYR 126.28 million ($26.66 million) from the MYR 140.89 million ($29.74 million) recorded in 2022.
This declining trend is also evident in the number of successful campaigns, which decreased to 51 in 2023, down from the 68 campaigns recorded in 2022.
Despite the overall decline in total funds raised in 2023, there was an increase in the growth of larger-sized campaigns, raising funds exceeding MYR 3 million ($630,000).
These constituted 25 percent of the campaigns in 2023, up from 21 percent in 2022.
The highest amount raised by a single fundraising campaign in 2023 reached a maximum of MYR 20 million ($4.22 million).
Professional, scientific, and technical activities retained its status as the most popular economic sector served by ECF in 2023, raising a total amount of MYR 32.51 million ($6.86 million).
A notable shift in fundraising stages is observed, with the number of seed-stage campaigns doubling to 42 percent, up from 16 percent in the preceding year.
Since its inception, ECF has garnered a total fundraising amount of MYR 686.69 million ($144.95 million) across 381 campaigns, with Shariah-compliant campaigns contributing 4 percent of the total funds raised.
Since ECF was first established, the total number of issuers has reached 377.
Nevertheless, the total number of issuers decreased to 50 in 2023, down from 66 in the previous year.
Since inception, the cumulative count of participating investors has exceeded 16,000.
For a year on year comparison, investor participation slightly increased to 4,095 in 2023 from 4,035 in 2022.
First-time investors comprised 76 percent of ECF investors in 2023.
As for peer-to-peer (P2P) financing, the total funds raised in 2023 grew by 32 percent to MYR 2.09 billion ($440 million), from MYR 1.58 billion ($330 million) in 2022.
Likewise, total campaigns in 2023 increased to 31,002 from 24,455 in 2022.
Campaign sizes in 2023 continued to be of smaller fundraising amounts, with 67 percent of campaigns raising MYR 50,000 ($10,554) and below.
Wholesale and retail trade; repair of motor vehicles and motorcycles remained the largest sector served in 2023, with total funds raised amounting to MYR 1.12 billion ($240 million).
The purpose of fundraising for this segment in 2023 continued to be predominantly for working capital.
As at end 2023, total number of issuers for P2P financing stood at 14,715.
In 2023 alone, total number of issuers increased by 42 percent to 5,355 from 3,767 in 2022.
Since its inception, P2P financing has raised a total of MYR 5.96 billion ($1.26 million) via 85,793 campaigns with 15 percent of the total funds raised contributed by Shariah-compliant campaigns.
The cumulative count of investors has exceeded 34,000 since P2P financing was first introduced.
In 2023, there was a slight dip of 3 percent, with total number of investors decreasing to 15,599 from 16,080 in 2022.
20 percent of investors who participated in 2023 were newcomers to the platform.