GAX, The Ghana Alternative Market which is a parallel market operated by the Ghana Stock Exchange has in a recent times intensified its campaign to urge SMEs to list on the Ghana Stock Exchange in order to take advantage the of long term capital for their growth and staying profitable.
Role of GAX
GAX whose sole aim is to focus on businesses with potential for growth seeks to accommodates companies at various stages of their development, including start-ups and existing enterprises, both small and medium.
Mr David Tetteh, a consultant to the Ghana Stock Exchange in a information session organised for about 35 companies on Ghana Stock Exchange remarked the following as bid to urge the SMEs to listed on the GSE.
“We have five listed, we probably have another five that are going through the process and then we have others that have also written to declare their intention to list. So, by the end of next year we should have at least 50 of them in the pipeline to list.”
He also recounted the efforts of GAX in their campaign through information sessions for entrepreneurs to assist in decisions about listing on the Stock Market.
This according to Mr. Tetteh this campaign is to expose the SMEs to the benefits of listing on the Stock Exchange with they were hitherto not aware of.
With planned outreach in the Western, Ashanti and Northern regional capitals for a start then expanding to the other regional capitals, Mr. Tetteh was optimistic and hopeful saying …. “We are expecting that in every group meeting, we find two or three companies that will be willing to go through the process… “Therefore, we expect that by the end of the year, we will have found a lot of them and next year we will be pushing a lot of them.”
“We have five listed, we probably have another five that are going through the process and then we have others that have also written to declare their intention to list. So, by the end of next year we should have at least 50 of them in the pipeline to list,” Mr Tetteh said.
Mr Tetteh however stated that one of the major challenges they seek to resolve with the information sessions is to get most entrepreneurs educated on the process of listing on the Stock Exchange as well making them understand that it’s not a cumbersome process which is above their leagues.
He also recounted that most of these SME owners have “the fear of losing control, they feel that if they list here somebody can take their companies away from them, we are telling that the minimum float is 25 per cent and nobody can take your company from you unless you want to.”
Easier access to Long Term Capital – Listing on this market will afford companies the opportunity to secure longer term capital. The raising of such capital allows for future expansion, growth and greater ability to stand competition.
Access to Long Term Capital at a relatively low cost – Raising long term capital through GAX will be at a relatively lower cost to the company. Advisory and Regulatory fees involved will be lower than that of the main list on GSE. Securities and Exchange Commission guidelines insist on total cost not exceeding 5% of the total amount to be raised. The listing fees on GAX is also a fixed flat amount.
Improvement in the financial position of the GAX company – An immediate benefit enjoyed by a GAX listed company is the considerable improvement in its overall financial position. The injection of substantial equity funds, for example, greatly improves the company’s balance sheet. With such capital reinforcement and market discipline imposed, improved profitability and efficiency are expected.
Enhanced Status in the Community – Listing on the GAX will raise the level of the investing community’s awareness of the company and its products. This will result for example in a greater ability to attract high caliber employees and increase general business opportunities.
Relization of Value of Investment – Owners of companies can also benefit from the realization of value of their investments when listed on GAX. The market will determine the value of the company and hence original owners can realize the value of their equity in their company.
Reduced Risk and Improved Liquidity – The GAX will also enable the companies broaden their investor base and provide liquidity for their shareholders/investors.
To help ease out the fears of the SMES, Mr Tetteh gave the below illustration to simplify the process.
“So, for individual engagement we try to look at the company itself, look at its own peculiar challenges and then draw a picture about the benefits that the Stock exchange can provide to them in order for them to go global.”
So we take it on a case by case basis. No company has the same reasons why they are not listing but it is a process. It may not be something that they will agree to in a month or two but we have a long term strategy of getting all of them to get on to the market.”
The added incentives of to be enjoyed by these SMEs according to the information from the Ghana Stock Exchange includes an underwriting and a GAX-SME Listing Support Fund.
Download the Rules of GAX or Visit the Ghana Stock Exchange to know more.