Peer-to-Peer (P2P) Financing
Peer-to-Peer (P2P) financing is yet another innovative form of financing that broadens the ability of entrepreneurs and small businesses to unlock capital from a pool of individual lenders in small amounts. P2P allows businesses to borrow and investors to lend capital through online platforms registered by the Securities Commission Malaysia. As of December 2019, there have been 8102 successful campaigns and RM632.38 million funds raised with 1866 successful issuers. Investors demographic are largely aged below 35 with 95 percent of the investment coming from the retail sector. Again only locally registered companies can raise funding through P2P platforms. The crowdfunding exercise is only considered successful if it reaches at least 80% of target and can only accept target mount raised. The interesting thing about P2P that is slightly different to ECP is that an issuer can be hosted concurrently for different purposes on multiple P2P platforms. However, the issuer is required to disclose to the P2P operator its intention to seek funding from other P2P operators concurrently.
Who can invest in P2P?
Investment in P2P is open to all investors, subject to the following limits:
- Retail investors (persons who are not sophisticated investors)
- A maximum of RM 50,000 per platform at any period of time
- Angel investors (accredited by the Malaysian Business Angels Network)
- No restriction on investment amount
- Sophisticated investors (persons within the categories of investors set out in Part 1, Schedules 6 and 7 of the Capital Markets and Services Act 2007)
- No restriction on investment amount
The Malaysian government has also initiated the Malaysia Co-Investment Fund (MyCIF) for ECF and Peer-to-Peer (P2P) financing to increase access to financing for micro, small and medium enterprises where traditionally challenge to obtain financing to catalyse their growth. SC administers the fund which was first announced in 2018 with a RM50 million fund size. Given the success of the fund, the Government increased the fund size by another RM50 million for 2020. MyCIF invests in ECF and P2P campaigns on a 1:4 ratio – for every RM4 invested by others, it will pump in RM1. Its co-investment scheme is open to micro, as well as small and medium enterprises (SMEs) but limited to RM500,000 per campaign. In addition, RM10 million was allocated for co-funding of social enterprises whereby MYCIF will invest RM1 million for a RM1.
List of Registered Recognised Market Operators for P2P
