ALT-X faces hurdles to woo investors
Malawi Stock Exchange (MSE) seems to be facing hurdles to woo investors, particularly small businesses, on its alternative capital market (ACM) which has not listed any entity since its inception some few years ago.
The idea to establish ACM, otherwise known as alternative exchange (Alt-X), was meant to offer an opportunity to companies that cannot list on the main bourse with 14 listed companies, due to stringent listing requirements.
MSE chief executive officer John Kamanga said in an interview on Tuesday that ACM—a platform specifically launched for small and medium enterprises (SMEs) with softer listing requirements—has not received the anticipated response from the investing public.
He noted that issues of governance, transparency and disclosure were put to protect investors, but some SMEs seem to be among the barriers of investment on the market.
Said Kamanga: “Some investors have shown interest to invest on the market, but none has listed. We find that most people are still struggling to meet the revised listing requirements because most of these [companies] have not yet adhered to issues of corporate governance.”
He, however, said the local shares market is still talking with SMEs to convince them that working in an environment where there are the three conditions—governance, transparency and disclosure—is to the advantage of the investor.
The current listing requirements on ACM require the applicant to, among others, have minimum subscribed capital in issue, including reserves but excluding minority interests; revaluations of assets not supported by a valuation by an independent professional expert acceptable to the committee prepared within the last six months and intangible assets of at least K50 million ($89,286).
There is also need for not less than 10 million equity shares in issue and submission of a profit history for the immediate past one year.
The applicant is also required, in analysis of future earnings to indicate credible returns on capital which are above average on a time-weighted basis.
Going forward, Kamanga said MSE will lobby government to put some incentives to create an enabling environment for SMEs as a leeway for them to list on ACM.
“We believe that if we introduce those tax incentives on the market, SMEs will come on board which in the end will not only benefit SMEs but Malawians as well.
“Once they position themselves well on the market, we believe that they will be contributing to the economy of the country by creating employment since their capacity will grow as the business grows,” he said. n
