With stringent compliance criteria preventing it from serving high-growth start-ups and young businesses, Islamic multibank investment platform IAP Integrated has formed an alliance with equity crowdfunding (ECF) platform Ata Plus in a bid to widen the pool of fund seekers it can serve.
“In the past, our ability to host promising, bankable companies on our platform has been curtailed by conventional compliance requirements,” explained IAP CEO Joann Enriquez. “The requirements specifically impact the companies that are young who can’t produce the minimum of having two years of audited financial statements. This has pushed us to explore collaborations with alternative financing platforms such as ECF, to aid these companies and leave no company behind.”
Through its partnership with Ata Plus, any early-stage firms or ventures that are not ready to be listed on the IAP platform will be directed to Ata Plus to raise funds through the ECF model. Similarly, Ata Plus would offer its issuers the option to raise funds through IAP.
IAP, a brainchild of former Bank Negara Malaysia governor Dr Zeti Akhtar Aziz, operates a rather unique model. It is a consortium of Islamic banks offering an internet-based multibank investment portal enabling sponsoring banks to match financing requirements of ventures. The platform targets both retail and institutional investors and facilitates investments through the investment account product. Since its establishment in 2015, IAP managed to facilitate RM211.4 million (US$52.42 million) in Shariah compliant investments from over 350 investors for 14 listings.
“The hope is that, after a successful equity raise and further growth, these promising companies can return to IAP for their future funding requirements,” Enriquez shared. In other words, IAP is positioning itself as an avenue for short- and medium-term project financing, rather than growth/seed funding. The partnership is also expected to benefit Ata Plus, which has raised over RM40 million (US$9.92 million) for SMEs and start-ups since March 2016 from 900 investors from 19 countries. The ECF platform, while not Shariah compliant, sees itself as a Shariah-based platform, in that it avoids listing ventures whose activities are against Shariah principles such as gambling and pork production.