PETALING JAYA: There are few policy measures and training programmes available to mid-tier companies (MTCs) in the country. Recognising this situation, Capital Markets Malaysia (CMM) has made available Elevate, a programme tailored to assist mid-tier companies and to ensure their long-term sustainability and business continuity.
CMM general manager Zalina Shamsudin (pix) said support for MTCs can be better targeted.
“The total number of registered companies with Companies Commission of Malaysia is 1.5 million. MTCs are between the 936 public listed companies and the 1.3 million small and medium enterprises (SMEs).
“These are the companies that are not accounted for and, by Malaysia External Trade Development Corp’s (Matrade) definition, they are categorised as MTCs. MTC founders worked very hard with their strategy or network to build their businesses, and now they have reached a point where they are clueless on how to scale up,” she told SunBiz.
According to Matrade, MTCs in Malaysia are defined as companies with annual revenue between RM50 million and RM500 million in the manufacturing sector and between RM20 million and RM500 million in other sectors.
Currently, there are only two programmes – Mid-Tier Companies Development Programme by Matrade and Endeavor Malaysia – that provide targeted support to MTCs.
“We spoke to many MTCs to know their pain points, ambitions, and the support they need. Simultaneously, we also talked to private investors such as venture capitalists and private equity firms.
“There were some pain points, such as some MTCs do not know how to sell their stories. Some of them have great stories but they do not know how to put together stories and do not have the right team to sell the story. Usually is the founder who was the story but the founder might not be the right person to sell the story.
“Another point we found was the governance structure, traditional founding companies focus on growing the business but they do not put into place business strategy to improve or to reinforce the governance issues, which is an area of concern,” Zalina said.
Another point of concern is disagreement between business owner and his children who are the working family members.
“Another thing is there are founders who do not have a successor to continue the business and just want to sell it but they do not know how to value their business they do not know the price they should be looking at to sell the business.
“We look at all these pain points and we created the Elevate programme last year to address all these problems to a certain degree, and it will benefit the capital market too,” she said.
CCM’s primary role is to support the growth of the capital market. The purpose of Elevate, which was launched in August 2020, is to build the pipeline for people who are willing to raise funds in the capital market.
One of the main things Elevate aims to achieve is to create awareness of the different fundraising opportunities within the capital market.
Zalina said there is low awareness among MTCs on fundraising options such as venture capital and private equity apart from the traditional methods MTCs’ founders are familiar with, such as bank loan, initial public offering, or bond issue.
Elevate is a 12-month programme that aims to upskill MTCs’ founders and senior management to be in a better position to raise funds. The training has three parts, including fundraising, and equity on the valuation of their companies.
Zalina said: “For example, the benefits of fundraising through the sale of equity, the benefit of fundraising to debt, what are the repercussions on your business model in terms of what they want to achieve and how to achieve their goals. Besides the financial beats, the programme helps them re-evaluate their business model in a course known as the ‘nine thinking’.
“The key thing is a lot of them don’t know how to market themselves, how to engage investors, and sell their stories. A strong element of the training includes all of the above.
“Besides training, we will identify a mentor to help them implement what they have learnt. At the end of the programme, we will give them pitching opportunities. We will guide them on the process of IPO. We will also introduce venture capitalists and private equity firms for them.
“Many people do not know that venture capitalists (VC) and private equity (PE) investors bring a lot of value to a business. Besides giving funding, they guide the company because they have so much experience and investing in sectors similar to that of the MTCs. VC and PE can bring best practices from other countries or introduce MTCs to potential supply chain.”
Another highlight of Elevate is that it will start a business clinic to guide programme participants. Furthermore, it will invite instructors from VC and PE firms to talk to the participants.
“We will do business matching and networking and prefer Malaysians as mentors because they know the problem,” Zalina said.
CMM, formerly known as Capital Markets Promotion Council, was set up by the Securities Commission Malaysia in 2012.