Malaysian IPO pipeline Heats Up: Tech Firms and Investor appetite

Kuala Lumpur – Venture capital firms are anticipating a surge in initial public offerings (IPOs) from Malaysian companies in the coming years, particularly those backed by venture capital and targeting a younger investor base. Several high-profile companies, including SkyeChip, Carsome, Applecrumby, The Vida World, and ttracing tech, are progressing towards potential listings, signaling a potential shift in the Malaysian stock market.

A Modest Track Record, A Changing Landscape

Historically, the number of venture-backed malaysian companies going public has been limited. However, industry observers believe this is poised to change as more firms reach a late-stage of development and seek public funding. This anticipated increase in IPOs comes as the Malaysian stock exchange, Bursa Malaysia, seeks to attract more new-economy companies.

Key Players and Upcoming IPOs

Several venture capital firms are driving this trend. gobi partners,a long-standing investor in Southeast Asia,expects several of its Malaysian portfolio companies to enter the IPO pipeline. SkyeChip,a Penang-based integrated circuit design company,is set to be GobiS first IPO on the exchange.As of the first quarter of fiscal year 2024, SkyeChip reported RM77 million in revenue and RM33.7 million in profit after tax .

carsome, Malaysia’s first unicorn – a privately held startup company valued at over $1 billion – is also exploring listing options. Gobi Partners believes a Bursa Malaysia listing would be a natural fit,given the platform’s strong brand recognition among Malaysian consumers. However, a US listing could perhaps yield a higher valuation.

500 Global, a Silicon Valley-based venture firm, is also identifying potential candidates for listing, including The Vida World, TT Racing Tech, and Applecrumby .

The Appeal to Younger Investors

A key driver behind the push for more IPOs is the desire to attract younger investors. These investors are increasingly seeking exposure to high-growth companies, even if it means accepting a higher level of risk. They prioritize companies demonstrating rapid international expansion and clear pathways to liquidity.

Thomas Tsao, co-founder and chairperson of Gobi, emphasizes that Bursa malaysia currently loses young investors because companies are often listed too late in their growth cycle. “Bursa doesn’t lose young investors because Malaysia lacks start-ups. It loses them as we’re listing companies too late. Young investors want exposure to growth while it’s still compounding, not after the risk is fully stripped out,” he stated .

Challenges and regulatory Adjustments

Currently, Bursa Malaysia’s Main Market requires companies to demonstrate profitability, wich can deter high-growth tech firms from listing prematurely. The ACE Market offers an alternative,but it carries a “junior market” stigma and may lack sufficient liquidity. the LEAP Market caters to elegant investors.

The Securities Commission Malaysia (SC) is addressing these concerns by reviewing listing requirements for the Main Market. Proposed changes include considering positive cash flow, rather than solely relying on profitability, for companies with a strong profit track record . The SC is also raising the minimum profit after tax (PAT) requirements to RM15 million from RM6 million, and the cumulative PAT to RM30 million from RM20 million.

Sector Focus: Deeptech, AI, and beyond

Several sectors are poised for growth in the Malaysian IPO market. Cradle Fund Sdn Bhd identifies deeptech and semiconductor start-ups as particularly promising. Other key sectors include:

• Circular Economy: Companies like Carsome and CompAsia.
• Semiconductors & Deeptech: SkyeChip, Efinix, and nanoSkunkWorkX.
• Taqwatech: Bitsmedia and Durioo+.
• Fintech Infrastructure: PolicyStreet and HealthMetrics.
• Foodtech: Zus Coffee and FMH Group.
• Artificial Intelligence: A growing sector with increasing investment.

The Role of Export-Driven Growth

Both 500 Global and Gobi Partners emphasize the importance of export-driven growth for Malaysian companies seeking to attract investment and ultimately list on the stock market. 500 Global categorizes Malaysian startups into three types, with those focused on regional or global markets being best suited for international exchanges like the US, while locally dominant companies are better positioned for Bursa Malaysia .

Khailee Ng, managing partner of 500 Global, stated, “Malaysian founders can play on that same stage [Silicon Valley]. In the last six months, we brought five Malaysian companies to take root there, and we will do even more in 2026.”

Looking Ahead

The Malaysian IPO market is undergoing a change, driven by a desire to attract younger investors and foster a more dynamic ecosystem.The success of this transformation will depend on regulatory adjustments, the emergence of innovative companies, and a continued focus on export-driven growth. The coming years are expected to see a significant increase in the number of Malaysian companies seeking public funding, potentially reshaping the landscape of the nation’s capital markets.