ManagePay appointed P2P financing operator


  • Tan Sri Ranjit Ajit Singh
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This article first appeared in The Edge Financial Daily, on November 4, 2016.

 

KUALA LUMPUR: ManagePay Services, a unit of ManagePay Systems Bhd, is one of six firms appointed as peer-to-peer (P2P) financing operators by the Securities Commission Malaysia (SC) to widen funding avenues for businesses.

The others are B2B FinPAL, Ethis Kapital, FundedByMe Malaysia, Modalku Ventures and Peoplender.

All six are expected to be fully operational in 2017, SC chairman Tan Sri Ranjit Ajit Singh (pic) said at the Digital Finance Conference 2016 yesterday, noting that this makes Malaysia the first country in the Asean region to regulate P2P financing.

The role of the P2P operator is to facilitate businesses or companies to raise funds from both retail and sophisticated investors through an online platform.

The SC executive director for innovation and digital strategy Chin Wei Min, said the six operators were chosen from over 50 applications received by the commission.

“They were selected [based on] the recognised market operator [RMO] guidelines, [encompassing] their business model, operational capabilities, technology, management and strategies, [among others],” he told reporters.

Ranjit, in his speech, said that according to some estimates, the Malaysian small- and medium-sized enterprises (SME) sector has a financing gap of more than RM80 billion.

“We believe that market-based financing, including equity crowdfunding (ECF) and P2P, may provide alternative solutions to address the financing needs of our SMEs,” he said.

The SC introduced the ECF last year to provide early-stage financing for start-up entrepreneurs, while the P2P financing framework that was introduced in April this year aims to address the funding needs of SMEs to raise working capital or capital for growth.

As of last month, 11 Malaysian SMEs raised a total of RM8 million through registered ECF operators.

Of the ECF investors so far, 48% were aged 35 and below, said Ranjit.

Second Finance Minister Datuk Johari Abdul Ghani, in his keynote address at the conference, described P2P financing as a very important platform for SMEs.

“P2P financing has proven to be successful globally in meeting the needs of SMEs seeking funding for growth, with US$25 billion raised globally in 2015 and estimated to grow to US$96 billion (RM401.28 billion) in 2025.

“I hope that with the introduction of our operators, we will also be able to leverage on this innovation to drive the growth of our local SMEs here in Malaysia,” he said.

The minister added that the government would also consider participating in such platforms in the future.

“The government would also look into using this platform to participate together with the rakyat in [equity participation and lending as] there is an element of transparency there.

“A platform like this would eliminate scepticism from lenders to fund SMEs, as it is done openly and people can evaluate their [risk appetites] as different people have different risk appetites.

“With the proposals from the SMEs in open platforms, it helps to mobilise the capital or funds that are in the market,” he said.

Meanwhile, the SC will be introducing its Digital Investment Services framework next year to meet the investment needs of the emerging digital generation and increase investor participation.

This will allow approved licensees to offer automated discretionary portfolio management which is a more cost-effective, accessible and convenient channel for investors to manage and grow their wealth.