By Jessica Wee
There is a growing trend of late for small-ish Malaysian tech companies to list in the US, whether through a SPAC (Special Purpose Acquisition Company) or IPO (Initial public offering) on the NASDAQ Stock Exchange.
This year, Starbox Group Holdings Ltd is the first company to IPO on Nasdaq. There were many Malaysian SPAC listed and of course, you would have heard about the de-SPAC of Grab Holdings, which merged with Altimeter Growth Corp.
Among the reasons Malaysian companies are choosing the US as a listing destination are:
- Valuation of tech companies in the US is multiple times higher than in Asia
- Access to a larger pool of investors, better credibility and greater funding opportunities
- Prestige in enhancing the company’s profile
- The US market is better aligned with environmental, social & governance and sustainability values
- US bankers and advisers are coming to Kuala Lumpur to encourage and fund local businesses to list
Another IPO is Malaysia’s e-commerce platform company Treasure Global Inc (TGI) which on 16 August 2022 announced the closing of its upsized IPO of 2.3 million shares in its common stock at a public offering price of US$4 per share, for aggregate gross proceeds of about US$9.2 million. They intend to use the net proceeds from the offering primarily to increase its capitalization and financial flexibility, in addition to working capital and general corporate purposes.
EF Hutton, a division of Benchmark Investments LLC, acted as the sole book-running manager for the offering.
On SPAC IPOs, ARC group together with EF Hutton (underwriting partner) are ranked #1 globally, having completed 19 out of 81 PAC IPOs this year.
Having spoken to veteran Malaysian entrepreneurs, they are concerned about listing their companies on the US market as it is well known to be punishing! Behind all the glitz and glamour of having a listed US company, what the US bankers fail to highlight are the:
- High cost of insurance. Being a litigious country where lawyers work on success fee (contingency fee), listed company owners are always at risk of being sued by their shareholders especially when there is a plunge in stock price. A single, disgruntled shareholder bringing a suit can cause expensive and time-consuming trouble for the company.
- High cost of maintaining the listed status which is easily around USD500k annually.
- Time difference. Being a Malaysian owner, you may never have a restful sleep at night as your company’s stock is being traded during the night.
Despite the bearish market sentiment and high costs involved in US listing, IPOs are still taking place albeit at a slower pace. Malaysia’s Evoair, a green technology company focusing on eco-friendly heating, ventilation and air-conditioning, continue its plans to list on Nasdaq in the fourth quarter of 2023.