Stock market debut is half the battle

KUCHING: An IPO should mark the beginning of a company’s next phase of growth rather than become a finish line for its founders.

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 companies needed to maintain their momentum after listing, particularly in deploying the capital they had raised and delivering on their expansion plans.

“They cannot lose focus.

“Because you cannot rest on your laurels after listing,” he said during the podcast with Stephanie Ng, Founder of Aurum Story, and Khoo Hsu Chuang, Co-Founder and Host of Do More Media.

Ting said some founders viewed getting listed and securing IPO proceeds as an accomplishment in itself.

“They think that getting the company listed is the end of the road. That’s their accomplishment already.

“Once they think that they have reached the end, they lose focus.”

He said that loss of focus could become apparent in the utilisation of IPO proceeds, which listed companies reported quarterly.

“There are situations whereby they’re unable to use up the IPO proceeds,” he said.

Ting said changing business conditions could sometimes mean that expansion plans outlined during the IPO were no longer appropriate.

“Their business is not doing well. There’s no point in me building another factory,” he said.

Capital could instead be directed towards strengthening the business in other ways, including hiring experienced people from the industry.

“You can hire very good people from the industry. The important part is you must have that thinking. You must have that mindset,” he said.

At the same time, Ting said founders needed to recognise that listing brought greater responsibilities towards shareholders.

“The founders cannot treat the company like its ATM machine after the company is listed.

“They must understand that. It’s like governance,” he said.

He said maintaining investor confidence also required companies to communicate more actively after listing.

“I definitely think not, particularly the growth story. Nobody really talks about their growth story after listing.

“Nowadays, I think it’s important to basically have good visibility among the investors,” he said when asked whether listed companies were doing enough to engage investors.

Ting said companies with solid businesses could remain undervalued when few investors followed their financial results or understood their growth plans.

“There’s a lot of good companies outside there, they are undervalued. It’s because not many investors follow their financial results or even follow their growth story,” he said.

He said significant developments, including major contract wins and new products, should be communicated to the market.

“If you actually secure big contracts, you have new products coming out, you should basically update your investors,” he said.

Asked whether Bursa announcements were sufficient, Ting said companies could go further in maintaining investor visibility.

He said the benefits extended beyond the share market, as listed status could also attract potential business partners.

“Many of our clients after being listed, there’s a lot of people who actually approach them for business deals because they know that you are a listed company already.

“So definitely you will gain this type of recognition,” 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