Malaysia’s SC announces new ECF and P2P platform operators

SC Fintech Roundtable. Photo: SC Malaysia

The Securities Commission (SC) of Malaysia on Friday announced eight new recognised market operators, including three equity crowdfunding (ECF) and five peer-to-peer (P2P) financial platforms, that will be operational by the end of the year.

With the addition of the new ECF and P2P financing players, there are now 21 market-based financing platform operators registered in Malaysia. As of March 2019, the ECF and P2P financing market had provided close to 350 million ringgit ($84 million) of alternative financing to nearly 900 Malaysian companies.

“The SC will continue to facilitate development of innovative digital solutions which democratise access to investments while broadening financing options available for all Malaysians.

“The introduction of ECF and P2P financing provides an alternative source of capital for MSMEs to fund business expansion, finance working capital and meet other financial requirements,” said SC chairman Syed Zaid Albar.

The newly registered ECF platform operators are 1337 Ventures, Ethis Ventures, and MyStartr while the new P2P platform operators are CapitalBay, MoneySave, CapSphere, Crowd Sense and MicroLeap.

New ECF platform operators:

1337 Ventures is looking to launch its platform called Leet Capital in the coming six months, said its founding partner Bikesh Lakhmichand. It offers access to market-based financing for tech-focused companies.

“We aren’t going out of our purview by joining the ECF scene; it’s a natural progression for us. It fits into the funnel we’ve been crafting and have planned since we first started 1337 Ventures as Malaysia’s first tech accelerator. From our track record, many angel investors, together with our corporate partners/clients, were keen to invest with us, and that started the ball rolling,” he said in a statement.

While Ethis Ventures has a regional presence in Islamic crowdfunding and fulfilling demand for Shariah-compliant investments; MyStartr offers a niche for the creative arts industry, and builds on its experience in rewards crowdfunding while also providing online marketing support.

New P2P platform operators

CapitalBay focuses on providing invoice financing to suppliers of large multinational companies and has expertise in tech, analytics and credit-risk assessment.

“Today, many small businesses struggle with cashflow and traditional lending models find it difficult to fulfill this gap. With the P2P approval, we would like to invite investors to join us in our mission to provide smart and inclusive financing to businesses across Southeast Asia,” said CapitalBay’s co-founder Ang Xing Xian.

MoneySave offers a new product in the form of insured trade invoice financing while providing added safety features for investors, drawing on its experience in trade credit insurance.

CapSphere focuses on asset and equipment financing, while adding value through its global and local partnerships in tech, analytics and credit risk assessment.

Crowd Sense seeks to facilitate SMEs through insurance premium financing while MicroLeap focuses on the microfinance sector, and aims to broaden access for middle and lower-class entrepreneurs.

We had earlier reported that the regulator had received 12 ECF and 25 P2P applications. The first batch of ECF licenses was given out to six platform operators in 2015, making Malaysia the first country in Asia to legislate ECF.

For ECF financing, the range of funding provided is between 130,00 ringgit and 3 million ringgit, whereas for P2P financing, the range is between 1,000 ringgit and 1 million ringgit.

“With the potential of sourcing such a wide range of funding amounts, ECF and P2P financing has the potential to be a fundraising platform for all types of businesses,” said Finance Minister Lim Guan Eng.

The SC also released a new property crowdfunding framework following amendments made to its Guidelines on Recognised Markets, pursuant to an initiative announced in Budget 2019 by Lim last November.

The revised guidelines list out the requirements and obligations of a property crowdfunding platform operator. These include minimum shareholders’ funds of 10 million ringgit ($2.4 million); obligation to provide fair, clear and timely information to both homebuyers and investors prior to participating in a property crowdfunding campaign; and exit certainty at the end of the agreed tenor.

Malaysia-based property operator The Edge Property Sdn Bhd, a subsidiary of The Edge Media Group, was the first to launch a P2P property crowdfunding platform FundMyHome in last November. Its investment scheme is currently open only to qualified individual investors and financial institutions.