KUALA LUMPUR (Sept 21): The Securities Commission Malaysia will make mid-tier companies (MTCs) one of its key development focus in the coming years.

It hopes to offer financing options that will enable the MTCs to accelerate their growth, including potential expansion to other business verticals or overseas market, the regulator said in its Capital Market Masterplan 3 (CMP3) report unveiled today.  

The report said MTCs have outgrown existing financing avenues for micro, small and medium size enterprises (MSMEs), but yet remain too small for traditional public markets.

“Currently, MTCs are heavily reliant on banks, and to some extent, private equity firms, but might require more sophisticated and bespoke financing options to make the leap to the next stage,” it added.  

As for the MSMEs segment, the SC noted that new alternative financing avenues have filled some of the needs of the MSMEs segment over the last decade, among which include the equity crowdfunding and peer-to-peer financing.

“While the size of these markets are still relatively small and fundraising activities remain concentrated around the Klang Valley, they have gained strong traction in catering to selected segments of MSMEs and look poised to broaden their reach to serve more issuers,” the regulator said.

The CMP3 report stressed the need for more tailored financing options that are appropriate for each stage of the company’s growth cycle and suited to its specific needs.

It said that while the SC has facilitated the introduction of innovations in financing models, markets and intermediaries, there is still a sizeable gap to be addressed collectively.

The masterplan calls for market participants to re-examine their offerings and operating models to ensure that they remain dynamic and relevant when faced with fast-shifting market demands.

Meanwhile, the report also mentioned that the traditional public equity and corporate bond markets are ripe for transformation.

The SC pointed out as to how the declining value of initial public offerings in the public market in recent years have resulted in annual equity fundraising activities being primarily dominated by secondary issuance.

“Corporate bond issuances remain popular among banks, larger corporates and infrastructure project companies with credit ratings of AA and above, but have become too cost prohibitive for companies with smaller needs or of a higher-risk profile,” it said. 

Read more stories about the Securities Commission's Capital Market Masterplan 3 (CMP3) here.