In a significant move to enhance access to funding for Malaysian mid-tier companies (MTCs), the Securities Commission Malaysia (SC) has signed a Memorandum of Understanding (MoU) with Khazanah Nasional Berhad. This collaboration aims to support the growth and expansion of MTCs through Khazanah’s Dana Impak Fund, with an initial commitment of RM500 million to catalyze financial support.

Strengthening the Capital Market for MTCs

The signing of the MoU aligns with the SC’s ‘Catalysing MSME and MTC Access to the Capital Market: 5-Year Roadmap (2024-2028)’, which seeks to create a more inclusive fundraising ecosystem for Malaysian companies. SC Chairman Dato’ Mohammad Faiz Azmi praised Khazanah's initiative, stating, “We appreciate Khazanah’s support of the MSME and MTC Roadmap and SC’s long-term goal to ensure a more inclusive and holistic capital market fundraising ecosystem.”

MTCs play a vital role in the Malaysian economy, accounting for less than 2% of firms yet contributing 36% to the country's GDP and providing 16% of total employment. However, these companies have often been labeled the “missing middle” due to their struggles to secure financing for growth. The MoU is set to address these challenges, paving the way for sustainable growth and resilience within this sector.

Khazanah’s Commitment to MTC Growth

Khazanah Managing Director Dato’ Amirul Feisal Wan Zahir emphasized the fund's mission to empower Malaysian companies and facilitate opportunities for MTCs to thrive. He highlighted that the Dana Impak Fund is a crucial element of Khazanah’s Advancing Malaysia strategy, which aims to enhance national productivity and global competitiveness.

The initial RM500 million earmarked for MTCs will be directed to high-potential firms through private markets, including private equity and private credit funds. This funding strategy is designed to ensure these companies have greater access to capital, ultimately fostering innovation and growth.

Collaborative Efforts for Capacity Building

The MoU also lays the groundwork for collaborative measures focused on supporting MTCs’ next growth phase and enhancing their innovation capabilities. This includes initiatives to raise awareness and facilitate access to the capital market for MTCs through fundraising incubation programs aimed at 60 to 100 companies. Additionally, Khazanah will implement specialized capacity-building programs in partnership with the SC to bolster MTC competitiveness and innovative capacity.

Through mutual cooperation, the partnership seeks to build a robust pipeline of capital market-ready MTCs. This includes upskilling selected companies on fundraising requirements via the SC’s Elevate programme, designed to enhance their growth and innovation capabilities.

Aligning with National Economic Goals

The initiatives outlined in the MoU are consistent with the objectives of the MSME and MTC Roadmap and the GEAR-uP programme. By fostering a supportive environment for MTCs, the SC and Khazanah aim to position these firms to contribute substantially to the nation’s economic landscape.

MTCs are not only significant domestic employers but also serve as critical engines of economic growth. By addressing their funding challenges, the SC and Khazanah's collaboration is expected to unlock new opportunities for business and innovation within this sector.

The MoU between the Securities Commission Malaysia and Khazanah Nasional Berhad represents a promising step toward enhancing the accessibility of capital markets for Malaysian mid-tier companies. By providing targeted funding and support, the collaboration aims to empower these firms, facilitating their growth and resilience in an ever-evolving economic landscape. This partnership not only reflects a commitment to fostering innovation but also underlines the vital role that MTCs play in driving Malaysia's economy forward.