MDEC and Bursa Malaysia shape the future for tech listings

• Organised ‘Tech IPO Insight’ as a guide for tech companies exploring IPOs
• In collaboration with Bursa Malaysia, MDEC streamlines startups’ path to go public

The road towards an initial public offering is challenging, particularly during these times where investors are acting conservatively and in fear of impending geo-political movements. In spite of this, Malaysian Digital Economy Corporation (MDEC) remains steadfast in its mission to enable tech startups to flourish, growing them from their seed stages to seeking public funding for rapid and global expansion. This commitment was underscored at the two-day "Tech IPO Insight: Navigating the Path of Public Offering" event, designed to demystify the initial public offering (IPO) process and provide a clear roadmap for companies looking to make their breakthrough.

MDEC's Founders Center of Excellence (FOX) programme aims to foster an environment where tech companies can thrive. The FOX programme is dedicated to cultivating high-potential startups by providing interventions in six key pillars – policy, business expansion, investments, amplification, talent and mentoring; equipping these companies with the tools and knowledge needed to scale in a sustainable manner.

Through collaborations with key entities like Bursa Malaysia, MDEC streamlines the path for startups to go public, reinforcing Malaysia’s position as a burgeoning tech hub.

Organised by MDEC, the "Tech IPO Insight" event was a comprehensive guide for tech companies considering an IPO. The event brought together industry experts from Ernst &Young (EY), RHB Group, Bursa Malaysia, MDEC, and Malaysia Digital (MD) status company; Daythree, to share their insights and strategies on navigating the IPO landscape. The aim was to equip businesses with the knowledge and resources needed to scale and succeed worldwide.

The inaugural day of the conference explored the compelling reasons for local companies to pursue an IPO on Bursa Malaysia. Attendees gained insights into the 'why', 'how', 'when', and advantages of listing on the local exchange. On the second day, the focus shifted to practical tools and strategies that company founders can leverage to successfully execute their IPO plans. Kevin Chew, senior executive director from EY, led participants through a workshop on preparing their companies for a successful public debut. Casandra Samuel Hogg, a partner at Lee Choon Wah & Co, then delved into the legal intricacies of IPOs. Finally, Stella Wong of Brand Soul shared invaluable insights on building a strong brand and crafting effective marketing strategies for pre-IPO companies.

Considerations for Tech Companies Going Public

IPOs, the process of a company offering its shares to the public for the first time, can be a game-changer for tech startups. It provides a significant influx of capital to fuel expansion, research and development, and acquisitions. Moreover, it enhances a company's visibility, credibility, and access to a wider investor base.

Dr. Sivapalan Vivekarajah, senior founder of ScaleUp Malaysia Accelerator shared, “An IPO provides listed companies with ‘currency’, the value of their shares that can be utilised to not just raise money for the company but to also use their shares for acquisitions. This is one way in which to scale up their inorganic growth and to acquire innovations and market share without utilising their cash. This is a unique opportunity only available to listed companies and one that more tech startups should employ to become regional and global champions”.

Key topics at the conference included the importance of pre-IPO preparation, understanding market conditions, and the post-IPO compliance landscape.

Several strategies were highlighted to ensure a successful IPO journey:

• Companies need to ensure robust financial health, clear business models, and solid growth plans.
• Timing the IPO according to market conditions can significantly impact success.
• Adhering to regulatory requirements and understanding the legal landscape is crucial.
• Building and maintaining strong relationships with investors is key to a successful public offering.

MDEC is committed to supporting the growth of the tech ecosystem in Malaysia. In order to grow rapidly, tech companies need substantial funding for their activities, innovations, research and talent recruitment, which are all aspects that will contribute towards their continued business growth. The transition from a local small business to a larger global one is not easy and requires a different mindset, network and more. Here, MDEC works with Bursa Malaysia to help these companies embrace the processes and to attain the means that are necessary for them to compete effectively on the world stage.

In essence, MDEC plays a crucial role in nurturing tech startups and preparing them for the public market, while Bursa Malaysia provides the platform for these companies to raise capital in which to expand their operations. 

Daythree’s Successful IPO Journey

In a panel discussion, Raymond Devadass, CEO & founder of Daythree Digital explained their journey of making a strong entry into the public market with a highly successful IPO on the ACE Market of Bursa Malaysia in 2023. "Choosing the IPO route for Daythree was driven by our strategic goals to enhance brand recognition, attract top talent, and access capital markets to support our growth and diversification strategy. This decision aligns with our commitment to building a stronger, more dynamic company poised for long-term success.”

Daythree is a prominent business process management (BPM) company that specialises in delivering exceptional customer experience (CX) solutions. With a focus on insights and innovation, they help businesses optimise their customer journeys across various digital channels.

Daythree’s focus on the high-growth customer experience (CX) management sector positioned it well for future expansion. With its experienced leadership teams, the company’s track record of delivering exceptional CX solutions to global clients instilled confidence in investors. Its IPO raised US$7.6 million (RM33.1 million), which will be utilised to expand the company’s operations, invest in technology, and strengthen its market position.

Tax Incentives for Tech IPOs

This year, to further incentivise tech companies to list on the local exchange, the government has introduced attractive tax incentives:

• Up to US$344,700 (RM1.5 million) expenses deduction: Companies listing on the ACE or LEAP Market can claim a tax deduction of up to US$344,700 (RM1.5 million) for eligible expenses incurred during the IPO process.
• Broader tax incentives: Tech companies operating within the National Corridor Economic Region (NCER) can benefit from income tax exemptions and import duty exemptions.

By leveraging the support of MDEC via the Malaysia Digital national strategic initiative, MD status companies are transforming the country’s digital landscape by leveraging technology and innovation to drive sustainable economic growth.

At the same time when MD status companies utilise the fundraising platform provided by Bursa Malaysia, they are well-positioned to navigate the IPO process successfully. Events like "Tech IPO Insight" play a crucial role in demystifying the journey, providing the tools and knowledge necessary to unlock the full potential of their businesses.

MDEC offers various programmes for Malaysia Digital status companies. Apply for Malaysia Digital status here.