Inside Bursa’s dual-market listing strategy

KUCHING: ACE and Main Market IPOs may undergo broadly similar regulatory scrutiny, but investors are essentially choosing between “potential versus proof” when deciding between the two markets.

M&A Securities’ Head of Corporate Finance, Gary Ting said during an episode of ‘Beyond the Prospectus: IPO Is Not a Lottery Ticket’ by Do More and Aurum Digital said ACE Market companies generally offered investors exposure to businesses that were still developing, while Main Market companies tended to have more established track records.

“Potential is the ACE Market. Proof is the Main Market,” he said during the podcast with Stephanie Ng, Founder of Aurum Story, and Khoo Hsu Chuang, Co-Founder and Host of Do More Media.

He said ACE Market companies were still growing and could eventually develop into Main Market players, with investors having to decide how much risk they were prepared to take.

“So it depends on your risk appetite,” he said.

Main Market companies, by comparison, were generally larger and more established businesses.

“The Main Market is proven. These companies are big.

“And you invest in those markets hoping that they can continue to be big and maybe grow even bigger. So to me, this is the true distinction between ACE and Main,” he said.

Despite the difference in investment profile, Ting said the due diligence and verification process for IPOs was broadly the same across both markets.

“For the ACE market versus so called Main Market IPOs, the process is the same. The same level of due diligence, the same level of checking, verification and everything is virtually the same,” he said.

The distinction became more apparent when shares were marketed to investors, he said.

ACE Market IPOs generally involved less book building, while Main Market offerings were more heavily targeted at investment funds.

“If we are doing a Main Board company, most of the investors that we target are the funds.

“So we have to do a lot of book building, marketing and whatnot. So ACE probably is more straightforward in that sense,” he said.

“That is from a selling point of view. But the regulations are basically the same.”

Ting said ACE Market could also serve as a stepping stone for companies that might be able to pursue a Main Market listing but preferred additional guidance during their early years as a listed company.

He pointed to the ACE Market’s three year sponsor requirement as one reason some founders might choose that route.

“Because ACE, you need a sponsor for three years. So maybe some of the founders feel that, you know, I feel a bit insecure because I’ve never been on a market before.

“Why not? We try the ACE Market as a stepping stone first to have a sponsor to guide us for three years,” he said.

He said those companies could subsequently apply to transfer to the Main Market.

On the growing number of IPOs, Ting said the wider selection benefited retail investors by giving them more companies to choose from.

“To me, it’s actually beneficial to the retail investor because they can pick and choose,” he said.

However, he said investors should not expect every newly listed company to perform well, as a range of factors could affect a company after listing.

“We cannot guarantee that every company can be a very good listing because there’s so many factors that can come into play. But the good thing is we have a lot to choose from.”

Responding to concerns over the size of some companies coming to market, Ting pointed to the importance of SMEs to the economy and their need for access to funding.

“SMEs actually are the drivers of the Malaysian economy. We have to help the SMEs to raise more funds.

“We have to start somewhere,” he said.

For those interested to hear more about ‘The Real Price of Going Public feat @Aurum Story | Gary Ting’, the podcast is available at https://www.youtube.com/watch?v=DGRs1HzdkxA&t=913s