MALAYSIAN companies may sell more right shares this year to raise funds, since other ways of financing have become difficult to obtain amid the credit crunch, chairman of the Securities Commission said. “In this period of risk aversion among investors, it may be easier to raise money from those who already know, or have more intimate knowledge of the company and its strategy,” SC chairman Datuk Seri Zarinah Anwar said. “Hence, more right shares are coming to the market. I think the trend will continue.”
Increasingly, companies are turning to their existing shareholders for more capital as the widening bond yields make debt-financing expensive, while bank loans are harder to obtain as lenders become more stringent. As comparisons, only 48 equity-raising proposals for a total of RM2 billion were approved by the SC last year, including rights issue and share placement.
As the capital market gets tougher this year, the regulator plans to make it easier and faster for companies to raise funds. Deputy Prime Minister and Finance Minister Datuk Seri Najib Razak this week said that rights issues by listed companies will no longer need approval of the SC.
“Rights issue plan will no longer need the SC’s approval in the first instance. Previously, they need to come first to the SC before going to the shareholders, and finally to register the prospectus with us. We’ve done away with the first step,” Zarinah explained yesterday. This will save the company about four weeks to bring the entire process to about eight weeks. It will also save them costs in terms of adviser and regulator fees.
The SC, which approved 31 initial public offerings last year and one this year, said 21 of these companies have yet to be listed. The regulator is considering another five IPO applications this year.
Approved IPOs are granted six months to make their debut on the stockmarket, but many are expected to hold back amid the weak sentiments.
Source : Business Times