Learn About Private Equity Financing for Malaysian Companies and Start Investing Today!
Private equity (PE) financing is becoming increasingly more mainstream here in Malaysia. It used to be a lesser-known form of alternative investment, and to an extent, it still is. Though PE in Malaysia is still in its early stages, it is advancing steadily. There is a real possibility that it will mature in the near future and serve as a powerful investment vehicle that can generate high returns. If you finance strategically, you might stand a chance at earning more than you initially expected. Learn about private equity financing for Malaysian Companies and start investing today!
What is PE Financing?
If you are familiar with stocks and how they work, PE is in many ways similar, except it is funded or invested in companies privately. PE provides companies with much-needed capitals, which can be used for leveraged buyouts or as venture capitals. All of this without pressure from the public market and more freedom of autonomy on the company’s part. It can be described as a “high risk, high reward” type of investment.
How is PE Financing Regulated?
Every country has its own regulatory laws, and Malaysia is no exception. In Malaysia, if a person wishes to engage in anything related to private equity, venture capitals, the Securities Commission of Malaysia is the governing body. The securities commission has published ‘The Guidelines on the Registration of Venture Capital and Private Equity Corporations and Management Corporations’ as the guiding document. This guideline is to be referenced thoroughly. Otherwise, you may risk non-compliance, which can potentially cost you.
PE Trends in Malaysia
The pandemic had undoubtedly left its mark on the PE market as well as the public market. Tech industries flourished and are expected to stay that way for some time, given how the pandemic has forced many people to work from home. Companies involved in mobile, telecommunications, and healthcare are most desirable. It would appear that investing in companies that are expected to grow during the pandemic will be an excellent choice.
What You Need to Know
The following are some of the important things you should know about PE investment in Malaysia:
- Purchasing shares is the most common way to acquire private companies.
- There are no restrictions on how foreign investors can buy many shares. Still, there are limitations to foreign ownership in certain industries such as telecommunications, petroleum mining and financial services.
- Share transfer in private companies has no restrictions.
- To be a qualified investor by the Malaysia Securities Commission’s definition, an individual must have certain personal or joint net worth assets and has a certain amount of gross annual income.
- Before you can acquire shares privately, you will need to get in touch with the company you wish to invest in.
- Prepare a letter of intent and negotiate the rest of the terms in an exclusivity agreement with the company’s representatives.
- You will need the help of a professional. This is particularly important in two cases: ensuring that you fulfil all statutory requirements and drafting specific documents. Many firms in Malaysia can offer aid in this endeavour.