Private Equity & Venture Capital
Overall, the Malaysian private equity industry continues to develop with the SC expanding its registration framework to include private equity firms since 2015. Within a short span of time, the private equity industry has demonstrated encouraging growth potential with total committed funds reaching RM 5,998.07 million as at end of 2019. Malaysia has a vibrant entrepreneurship ecosystem with innovative start-ups companies ready for commercialisation. The need for funding and investment assistance to allow start-ups to flourish has led to the growth of venture capital firms. As of December 2019, there are 105 Venture Capital Corporations (VCC) and Management Corporations (VCMC). The government and investment companies remains the major provider of funds followed by sovereign wealth funds and corporate investors. In order to assist the cultivation of a healthier entrepreneurship culture, efforts are being directed in providing the necessary business and regulatory environment, ensuring access to financing at an early stage of business and reviewing existing policies relating to the commercialisation of innovation. To address the funding gap faced by SMEs and as alternative avenue of exit for private equity firms, the Malaysian LEAP market was launched in 2017. It has achieved market capitalisation of RM2.4 billion as of 31 December 2019 according to Bursa Malaysia. As a testament to the attractiveness as a listing avenue, half of the listings on the Malaysian stock exchanges last year were on the LEAP market. Continuous enhancements are being discussed in order to make the LEAP market even more attractive to investors and issuers
Malaysia’s Pipeline of Investible Companies
Based on the latest analysis by the SC’s Economics Department, there are approximately 10,000 Large Private Enterprises (“LPE”) operating in Malaysia with over a million Micro/Small Medium Enterprise (“MSME”) contributing over 70% of our GDP. Below are statistics on the private equity and venture capital industry in terms of the types of industries that has attracted the most investments and investment by financing stages.
Corporates are also increasingly aware of the value of alternative financing, with prominent corporates such as Petronas and AirAsia establishing their own corporate venture arms to source for potential investee companies, which lend synergies to their business model. As highlighted in a recent report by Preqi, there are many untapped potentials in the manufacturing sector in emerging regions of Peninsular Malaysia.