LISTING ON THE ACE MARKET
OF BURSA MALAYSIA SECURITIES
BERHAD
SECTION 1
WHY GO PUBLIC?
2
Why Go Public?
■ Alternative source of financing

An alternative financing option from conventional bank loans, which are costly & requires fixed terms
of repayment

Capital from new shareholders at minimal/ no cost (save for administrative cost)

Future fund raising exercise could be structured from company’s assets and cashflow into a hybrid debt
instruments/ issuance of new equity securities
■ Ability to grow inorganically

Inorganic growth opportunities via mergers and acquisitions through share swap exercises which would not
strain cash resources
■ Enhanced image and status of company

Preference often given to listed companies in awarding major projects as they are generally viewed to be
more prestigious, stable and financially viable than companies whom are privately held
■ Enhanced Liquidity

Liquidity of securities greatly enhanced since quoted securities are easily tradable & potentially trades
at premium

Quoted securities tend to be accepted by lenders as collateral

Provides an avenue for promoters to exit/ cash out at premium
■ Ability to attract and retain quality employees

Companies are able to attract and retain quality staff & professionals

Can establish ESOS for directors & employees
3
Why Bursa?
Equity funds
raised via IPOs


Total capital raised via IPOs in 2007 amounted to approx. RM2.5 bil.
Total capital raised via IPOs in 2008 amounted to approx. RM1.3 bil.
Active market
with high liquidity


Total annual trading turnover on Bursa in 2006 and 2007 (end Oct) approx.
RM250.3 trillion and RM477.5 trillion respectively
Active secondary placements & M&A
Political/
Geographical
advantages



Politically more stable compared to most regional peers
Sound financial system along with well-established legal and corporate regulations
Principles-based regulatory & governance approach
Attractive to
funds

Malaysia fast becoming a popular Islamic financing hub thus attracting funds from
worldwide especially the Middle East



Main Market and ACE Market
Well diversified industry ranges from consumer products to technology
High concentration of institutional investors
Choice of markets
and products
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SECTION 3
LISTING ON ACE MARKET
5
Overview of the IPO Process
Submission & Marketing
IPO Decision & Suitability Test
• Appoint Main Adviser/Sponsor /
other professionals
• Due Diligence
• Pre-listing restructuring
• Valuation
• Preparations of submissions
• Submission to authorities
• Roadshows & bookbuilding
• Continuing obligations
• To build tracks for Main Board
listing
• Underwriting
• Officially list on Bursa
Listing & Quotation on ACE
Market
Trading & Aftermarket
Approx. 5 – 7 months
6
Simplified Entry Criteria
•
All business sectors, no longer confined to tech and high growth sectors
•
No requirement on revenue, operating record and profit
•
Must apply for admission through a Sponsor
•
Moratorium on promoters shareholdings:
- 1st 6 months entire shareholdings, subsequently 45% of nominal paid-up
capital, selling 1/3 p.a. straight line basis
- If yet to generate revenue, maintain 45% of nominal paid-up capital under
moratorium until 1 FY of audited operating revenue
•
Removal of minimum issue price of RM0.50 requirement
•
Allow offer for sale if company has operating profit
•
Offer of securities to general public made optional
•
No mandatory underwriting arrangements
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Roles & Responsibilities of Sponsor
Strict Governance Structure
•
Sponsors must comply with rules issued by:
- SC (Principal Advisers Guidelines, Licensed Intermediaries, Due Diligence Guidelines,
Prospectus Guidelines)
- Bursa (ACE Market LR – Annual review by Sponsors, Performance review by Exchange)
Sponsor Requirements & Obligations
•
Sponsorship period 3 years – 1st year must be IPO Sponsor
•
Sponsorship continues until Sponsored Corporation generates 1 FY audited operating revenue
•
Assess suitability of applicant
•
Guide & advise sponsored corporation and its directors
•
Obligation to liaise with Exchange on Sponsor responsibilities e.g. LR breach not satisfactorily
resolved
8
Shareholding Spread
Commitment by Sponsored Corporations to Sponsors
•
To assist Sponsors, Sponsored Corporations is obliged to:
- Provide information and assistance to Sponsors
- Engage and consult with Sponsors on timely basis
Initial spread requirements
•
ACE Market: 25%, 200 public shareholders
Continuing spread requirements
•
ACE Market: 25%
•
No min number of public shareholders
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Processes & Procedures
One approving authority
•
Bursa approves listing of secondary issuance of securities
•
Shorter time-to-market
Simplified listing process
•
Quotation application will be merged with listing application for initial and additional
listings, documents for quotation will be in the form of undertakings
•
Listing application form prescribed for ease of submission
Areas of focus
•
Corporate governance, conflict of interest, public interest, compliance with minimum
criteria, adequacy of disclosures
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What Investors Are Looking For
Your Business










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Corporate Strategy
Established track record
Market reputation
Viable business with good growth prospects
Quality assets, goodwill and branding
R&D capabilities
Competitive pricing
Established customer & supplier base
Quality accreditation
Sustainable competitive edge
Healthy balance sheet
Good cash flow management
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Execution & acquisition strategy
Ability to move up the value chain
CAPEX investment
Dynamic capital management
Attractive dividend policy
Corporate Management

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
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Qualified & experienced
management
Transparent board
Risk management skills & internal
control
Good corporate governance &
execution skills
Timing
Week 1-4
• Appointment of
professionals
- Adviser
- Reporting
Accountant
- Solicitors
- IMR/ICR
- Company
Secretary
 Formation of
DDWG + kick-off
meeting
 Requisition of
information from
professionals
from company
 Commencement
of:- internal
control/risk
management
review
- Legal due
diligence
 Preliminary
listing scheme
 Site
visits/Interview
with key
management and
directors
Week 5-9
• First draft of:- IMRR
- ICRR
Reports
- SFAR
- IMR/ICR
 Ongoing due
diligence
 Comments on
Reports
 First draft
Prospectus and
listing
application
Week 10-15
• First draft
Reports
 Final draft
Prospectus +
Listing
Application
 DDWG meeting /
discussion on
issues
 Final Due
Diligence Report
 Pre-verification
meeting
 Interview with
customers +
suppliers of
company
 Draft Due
Diligence Report
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Week 16-20
• Verification
meeting with
the Board of
Directors +
Professionals
Week 21-25
• Registration of
Prospectus
 Open period
 Listing
 Signed copies of
Report available
 Submission of
Listing
Application +
Prospectus
 Public exposure
of prospectus
 Receipt of
proceeds
Expenses
Main Adviser/
Sponsor
Legal
Adviser
Reporting
Accountant
Authorities
Printer
Total expenses
approx.
RM1.5 mil – RM2.0 mil
Valuer
Share
Registrar
Issuing
House
Placement
Agent
Underwriter
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Note:
The total fees & expenses are
estimates based on the
current market condition,
and are subject to the
discussion between client and
each individual professional
party
SECTION 4
STRUCTURING & POST LISTING
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Listing Vehicle

Company can listed via a new holding company (“Newco”) structure

For illustrative purposes:
Existing companies
Seeking listing
A
B
Newco structure
C
Newco
A
B
C
A : Company
A : Company
B & C : Subsidiaries, future
expansion
B & C : Subsidiaries, future
expansion
Recommended structure:
 Financial and structural flexibility
 More effective for future expansion
plan
 Potential spin-off
15
Right Media & Investor Relations
Roadshow
Early preparation is needed particularly on equity angles, Q&A, coaching,
event management & to book fund managers
Informative guidance Provide a clear picture on industry structure, business model, growth
prospects, key assumptions and cost drivers.
Commitment
Investment
Sensitive to
comments
Information
transparency
Long term and continuous commitment to communicate effectively to
investors
Investment of time and effort from company’s key decision maker supported
by reliable information systems
Fund managers’ comments are what market wants
Provide consistent & regular amount of information to fund managers and
exclusive media interviews to media on regular basis.
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SECTION 5
CONCLUSION
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Conclusion
We wish to register our keen interest to assist you in your IPO on the ACE Market of
Bursa Malaysia
In moving forward, we would need the following documents in order to conceptualise
an optimum structure of your company’s IPO:
Last 5 years audited financial statements;

Latest management accounts;

Net profit forecast and projection for the next 3 years (rough estimation)

Estimated funds size required and expected utilisation of proceeds, e.g. for
capital expansion, working capital requirements, details of potential
acquisition, etc; and

Company profile and its shareholding structure
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