SME market set for March 2013

The Ghana Stock Exchange (GSE) says it plans to launch the Ghana Alternate Market (GAM) for small- and medium-scale enterprises (SMEs) by the end of first-quarter 2013.

This follows approval by the Securities and Exchange Commission (SEC) of the rules and regulations that will govern the proposed market.

 “With the approval of the regulations, GSE can now approach SMEs. We have applied for funds from donor agencies and are working with the Venture Capital Trust Fund to prepare them to list,”

Mr. Ekow Afedzi, Deputy Managing Director of the GSE, said. The concept of the Alternative Market is to address complaints by SMEs about the stringent criteria which make it impossible to use the main stock market to raise equity for their businesses.

 According to the GSE, it is tentatively looking at SMEs with a minimum stated capital of GH¢250,000 and that have been in operation for at least a year. It will however consider “greenfield” companies that have the potential to be profitable.

 Ordinarily, a company should have been in operation for at least three years with a minimum stated capital of GH¢1million to qualify to list. And once listed, the entity is required to publish its financial statements quarterly.

For the new SME market, listed entities will be mandated to publish their statements half-yearly. The GSE has also set up a GH¢1million revolving fund to support the listing of SMEs on the proposed Alternative Market.

The Fund, known as the SME Listing Revolving Fund Facility, will provide resources to qualifying high-growth companies to have listing expenses paid ahead of actual public floatation.

This fund is expected to be operational following approval of the structure for creation of the GAM. The GSE and other donors are expected to contribute to the fund. Once the fund is in place, SMEs will be able to apply for monies to meet the cost of listing.

The Venture Capital Trust Fund (VCTF) has contributed US$500,000 into the fund. In recent times, the Exchange has taken measures to boost liquidity and trading. Among them is a new requirement for companies to increase the number of their issued shares to 100 million. Of the 35 listed entities, 15 have been affected by this policy.

 Last year, the exchange signed a memorandum of understanding with a private equity fund-manager specialising in SMEs to use the market as an exit-vehicle for investee-companies under the fund’s management.

SEC is also considering a proposal to increase the minimum capital of licenced dealing members on the exchange.

More capital would help dealers trade more stocks and create demand when the market is lean. source:b&ft