What is it all about?
For starters, the LEAP Market is:
- Intended for SMEs or Small and Medium Enterprises
- Aimed to provide better visibility in the capital market for these companies (and help them raise funds in the process)
- Meant for SMEs that do not meet the requirements of being listed in the MAIN and ACE Markets respectively
- Only accessed by what is known as Sophisticated Investors – these are those with net assets of more than RM10 million or anyone with more than RM3 million in personal assets
- Also available for individuals with more than RM300,000 gross income annually
Why LEAP Market?
The main reason why the LEAP Market was created was to help SMEs get more fund. After all, they are the ones that form the largest group in the economy. Their dependency to raise funds usually come from financial institutions which contribute to more than 95%. Through the capital market, SME financing only managed to secure not more than 4%. This is the very reason why the LEAP Market wants to increase such an option.
What about other options?
For SMEs, there are actually many methods to raise funds which include:
- Venture Capitalists or VCs
- Angel Investors
- P2P or Peer-to-Peer Lending
- Equity Crowdfunding
- and many more
So why should they choose the LEAP Market instead?
Benefits of using LEAP Market
Perhaps the best way to decide why any SME will choose to use the LEAP Market is its additional benefits as compared to every other option available which are:
- the SME will be raising funds from the public from what is known as a ‘Sophisticated Investor’
- A level playing field among other SMEs in the market
- The SME enjoys better corporate governance and is more regulated
- Option to progress into the larger ACE Market and MAIN Market
- A better gauge of the company’s performance through share prices and market capitalization
Is this a viable choice?
One thing for sure, it is the perfect option for any SME intending to make it big. Companies like Red Ideas Holdings Berhad and Cloudaron Group Bhd were the first 2 companies to be listed in the LEAP Market. What makes this a good option is that they can see the potential for growth. However, it means the company will come under the spotlight and shareholding become more divided.
Qualifying for listing in LEAP Market
To be eligible to be listed in the LEAP Market, the company must fulfill the criteria:
- The company must be incorporated in Malaysia as a public limited company or a private limited to be converted into a Berhad
- There is no requirement for minimum profit as yet
- A minimum of at least 51 members
- A minimum shareholding spread of 10% of its ordinary shares to be traded in the market
- Must be approved by Bursa Malaysia unlike the other markets which need the approval of the Securities Commission as well
Who trades in the LEAP Market?
Unlike the other markets, the trading of shares in the LEAP Market can only be done by the ‘Sophisticated Investors’ who meet the guidelines and requirements set. As such, it might not be as ‘public’ as it seems which at this point is very beneficial to the company.