New platform for SMEs to list on GSE
The Ghana Stock Exchange has abolished the second listing platform on the local bourse to pave the way for rolling-out an alternative market designed purposely for small- and medium-scale enterprises with potential for growth to raise needed capital for their businesses.
The second listing, which was created as a platform to attract SMEs that do not meet the requirements to join first official listing on the stock exchange, failed to get the needed responses from small enterprises -- only two companies listed-- because of a “not-too-good” perception that businesses had of the platform.
The Deputy Managing Director of the GSE, Ekow Afedzie, explained to the B&FT that the second listing has been scrapped as a result of the inferior nature that businesses perceived it as having, which has informed management of the stock market to replace it with a new separate trading platform dubbed the Ghana Alternative Exchange (GAX).
The GAX is expected to be launched in the next three months and is equally aimed at attracting SMEs, but differs from the second listing platform in that the requirements for listing have been relaxed -- with enhanced incentives to attract the attention of SMEs.
He said rural banks will also be allowed to list on the GAX, provided they meet the stated-capital requirement of the central bank.
“The second listing was seen as an inferior market because it was meant for companies that were unable to do first official listing.
“This new Exchange will be branded differently; it is not going to be bureaucratic, it will have its own five-member committee -- which is expected to approve applications within 15 days on receipt -- and a governing board.
“The key thing is that we must create an avenue for SMEs to raise long-term capital, we cannot sit back and watch SMEs struggle to raise capital.
“SMEs play a major role in the development of the economy because most of the companies in the country are SMEs. But one of the challenges facing SMEs is lack of long-term capital in order to expand.
“That is why the Securities and Exchange Commission, GSE and Ministry of Finance has come together to find an alternative market to make medium- to long-term capital available to SMEs hence the need to set up a separate market that will have simpler requirements, and incentives to make it easier for companies to go out there and raise the capital,” he said.
Among the requirements and incentives that the GSE has put in place to attract SMEs to the new trading platform is included, among other things, businesses with a minimum stated capital at the time of listing of GH¢250,000; a minimum of 20 shareholders; and waived application and listing fees apart from an annual fee of GH¢2,000.
Again, the GSE is in the process to establish a revolving fund to pay for all the preparatory works for listing, pre-Initial Public Offer financing and underwriting to ensure that offers are successful.
Mr. Afedzie said the GSE will not rush to launch the GAX until it has at least two firms listed, adding that “sponsors of companies onto GAX should be ready to underwrite, because without that there is going to be the normal best efforts; and if we continue on that trend, we will not get companies issuing securities to raise capital in this part of the world.”
Among the requirements for admission onto the GAX is that the entity must be a limited liability company and ready to have its shares traded on the market.
This article was originally posted on Sustainable Development Africa Platform
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