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Capital Markets

Thai stock exchange to launch startup platform by year-end

Amid boom in new companies, 'Live' aims at offering more exit strategy options for investors

Thailand’s Science and Technology Minister Atchaka Sibunruang tells the audience at the Startup Thailand event held in Bangkok on July 6 that innovative startups will help the country move out of the middle income trap

BANGKOK -- On the back of a booming startup scene, the Stock Exchange of Thailand announced Thursday that it will launch a new fundraising platform for startup enterprises by the end of the year.

Any startup registered in Thailand can raise funds on the new platform, which is called Live, starting from the day the startup is founded.

"We hope to improve the liquidity of the startup market in Thailand," SET President Kesara Manchusree told the Nikkei Asian Review, adding that with both primary and secondary trading, the new platform will make the capital market much easier to access for startups, while for investors, it will mean more options for their exit strategies.

Live will be operated by LiveFin Corp., in which SET controls a 99.99% stake.

It will be different from a "regulated market" like the two existing ones under SET -- the SET main board and the small-cap MAI -- and will run under different rules.

It will be an online platform in which registered startups can launch public offering campaigns. Investors can apply to participate in the public offerings as well as trade existing shares with other investors.

The volume and prices of shares, among other investment conditions, will be decided upon negotiation between the investor and the startup. Negotiation will be carried out via an online chat function provided by Live.

At the initial stages, trading will be limited to accredited investors such as institutional investors and venture capitals. High net worth individuals with annual income of more than 4 million baht ($117,000) or assets of more than 50 million baht will also be able to take part.

The trading platform for startups, which is operated by the stock exchange but has easier requirements compared to regulated markets, will be the first of its kind in Southeast Asia, noted Pongpiti Ektheinchai, the head of issuer and enterprise development at SET.

Increased funding

Thailand is seeing a surge in startups. The number of active startups is set to more than double this year to 1,500, compared to 700 last year. Startup funding has increased nearly tenfold over the past three years, with $86 million raised in 2016 alone.

Large companies are becoming increasingly eager to take part in the funding, especially for startups that are relevant to their own businesses.

Major banks, namely Bangkok Bank, Siam Commercial Bank and Kasikornbank, for example, have recently set up venture capital funds to support fintech startups each with a total capital of 1 billion to 2 billion baht.

Meanwhile, Siam Cement Group, the country's largest industrial conglomerate, is seeking to invest in new industrial technologies such as logistics and B2B e-commerce through its venture capital fund AddVentures. Set up in June, the fund is planning to spend 2.5 billion to 3 billion baht on startups in the next five years.

Lack of potential startups

However, despite all this funding power, the country lacks potential startups to invest in, according to Thanapong Na Ranong, the founder of Thailand's first corporate venture capital InVent, set up by telecom company Intouch Group. Currently heading the VC of Kasikornbank, Thanapong said the country needs to attract more angel investors who can invest and support startups at the very early stages prior to pitching for funding from formal VCs.

"We need cases of successful exits to attract angel investors," he told the Nikkei Asian Review. "In that sense, Live [the new SET platform] will be a vehicle to develop the country's startup scene."

Thailand, which has long relied on labor intensive industries, is trying to shift to a technology-driven economy. The government and businesses alike are hoping innovative startups will help the country move in that direction.

"We live in a world of technology disruption and we need to adapt to the changes by adjusting our economic structure for sustainable growth," Science and Technology Minister Atchaka Sibunruang said at a startup event that kicked off Thursday in Bangkok. "Startups will be our new economic warriors that will adopt technology and innovation to ... lead us out of the middle income trap."

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