News – Mixed response to move for trading venue for unlisted firms

This is how you skin a sheep. You give a platform for the ‘sheep’ to trade. An then when they are least expected, you skin them alive!

Ranjit also explained that the trading venue for unlisted firms to raise funds would be done on an electronic platform.

“The aim here is to provide a ‘matching facility’ area where on one side, you have companies that want investors for capital, and on the other side, you have investors like private equity (PE) firms and venture capitalists who want to invest,” he said.

In theory, it certainly sounds good.

Here comes a new platform for fundraising.

Now investors get to refer to this platform and filter through the companies which best suits their investment appetites.

However, response to this platform may be an issue.

Afterall, many of the companies trading on this platform may be start-ups or greenfields.

Hence, the profile of investors looking to invest in those sort of companies would be skewed towards the venture capitalists and private equity investors,

“While this electronic trading platform is better than none, liquidity may likely be an issue. This would in turn determine the acceptance and popularity and hence successful take off of this platform. Teething issues would also be anticipated, such as effective and efficient settlement,” said HwangDBS head of equity capital markets, Sherilyn Foong. “While accessibilty and liquidity remain key criteria for its success, perhaps another category such as our former MESDAQ can be considered.