The Malawi Stock Exchange (MSE) says it has scaled up its efforts to woo investors particularly Small and Medium Enterprises (SME’s) to take advantage of the existing Alternative Capital Market (ACM) also known as AltX which has since its inception in 2010 not listed any entity.
MSE’s AltX is a board for small, fast growing companies.
MSE chief executive officer John Kamanga said in an interview that the AltX a platform launched specifically for SMEs with softer listing requirements is getting a lukewarm reception from the investing public despite the platform being the cheapest way to raise capital.
He notes that issues of governance, transparency and disposure which are mandatory listing requirements aimed to protect investors seem to be among the hinderances of investment on the market.
“Some investors have shown interest to invest on the market but none has listed. We find that most people are skeptical to come on the market due to issues of control of their entities while others seem to have problems with issues of corporate governance which is key among the listing requirements,” he said.
He, however, said MSE is still convincing the small and medium enterprises that working in an environment where there are the three conditions – governance, transparency and disposure is to the advantage of the investor.
“Most of these SMEs are family-owned businesses and most of these are not ready on issues of proper corporate governance and stock exchange is not ready to give in on proper dilution of these issues. What we want is that there be total transparency and corporate governance,” he said.
One market analyst Nelson Mkwende in an interview on Wednesday pointed out lack of understanding on the benefits of listing on the AltX as key among reasons why there is little or no activity on the market.
“Going on the secondary market, we find that it is difficult to convince people to list on that market yet it is a cheaper source of raising capital.
“If people do not understand the main market, it is likely that they would not know the AltX,” he said.
Save for the company to be duly incorporated, a public company, its securities be fully paid up and freely transferable, the AltX has simplified requirements such as a minimum subscribed share capital to between K250 million to K500 million while the main bourse requires a minimum subscribed share capital of at least K500 billion.
The AltX requires at least 20 percent of issued capital for which a listing is being sought must be offered to the public while the main market requires at least 25 percent of issued capital for which a listing is being sought must be offered to the public.
On the AltX market, a company needs to have not less than K30 million equity in shares. n