Good time to go public

KUALA LUMPUR: The present is a good time for companies to begin a listing process on Bursa Malaysia, says an analyst.

The market is recovering from the effects of the Covid-19 pandemic and companies should consider listing as the time is right and conditions are good, according to senior partner at Grant Thornton Desmond Tan.

“List your company when the market is up. Yes there will be challenges but once it’s done and the minute you hit the ‘gong’ it will be worth it.

“Most companies undergo the listing process to reach a few objectives including business expansion,” he said.

Companies in need of funding would undergo an initial public offering (IPO) to either purchase new factories or machinery that will increase productivity and subsequently, reduce borrowings.

A company’s reputation is also reinforced by an IPO, as its suppliers, manufacturers and customers would have more confidence in the enterprise.

“When tendering for big projects, this is important as you want everyone to trust you as a company and know that you will fulfil what you need to,” he told StarBiz.

There are also companies that intend to reward their employees through the issuance of shares.

“Employees will feel like they have a part to play in the company while at the same time, the move will help to retain talent,” he added.

Additionally, companies would normally go public to ensure a succession plan, particularly for a second generation of leaders to take over from family-run businesses.“We noticed that the younger generation, who had more exposure from studying or living abroad, is bringing back ideas and strategies that are worth it.

“As long as your numbers are accurate, tested and can be presented according to the international financial reporting standard, there is nothing to worry about.

“This means you have paid the taxes that are meant to be paid,” he pointed out.

Companies would also need to ensure they have sufficient working capital, attainable profits and be in a manageable liability status.

On the changes to companies post-listing, Tan said most of them might have been traditional or conservative in reporting their financials prior to an IPO.

“They now will have to report results on a quarterly basis and be transparent to the board of directors and shareholders,” he said.

He added that corporate governance including environmental, social and governance issues should be taken into account as well.

According to Tan, the IPO market in the country remains strong with a good potential for growth.

According to Bursa Malaysia, a total of 25 companies were listed in 2023, with six on the Main Market, 18 on the ACE Market and one on the LEAP Market.

“We have companies that had asked us to begin the IPO process.

“I think the number of newly listed companies will be maintained for 2024,” he said.

Meanwhile, the Securities Commission had announced that it would speed up the IPO process and reduce time-to-market to ensure that the country remains attractive to investors.

According to SC chairman Datuk Seri Dr Awang Adek Hussin, the capital market is resilient with total funds raised hitting a 10-year high of RM179.4bil in 2022 despite the tough global environment.

He added that plans were underway to facilitate the setting up of family offices in the country, widening the definition of sophisticated investors to include angel investors, and reducing the board lot size for share trading on Bursa.

Prime Minister Datuk Seri Anwar Ibrahim has been diligent in promoting Malaysia on the global stage.

Tan said: “Anwar is the top salesman for our country right now.

“He is moving in the right direction to attract investment from all over the world while maintaining good relationships with other nations.”

Tan hoped that the government would push for more projects and put in place targeted subsidies under Budget 2024.

Meanwhile, Rakuten Trade head of research Kenny Yee said the local stock market has been improving with foreign net buying increasing.

“There is good sentiment and the ACE Market has been doing well.

“I foresee growth next year as the government revives the market and economy,” he added.