Benefits of listing on an Exchange
LISTING on an Exchange provides an exclusive privilege to transparent trading of securities. Trading becomes more convenient and efficient as it takes place on centralised and organised platforms. Some of the benefits associated with listing are as follows:
Access to growth enabling capital – Companies can raise capital to finance strategic business objectives, both at admission and through subsequent capital raising exercises thereby providing the financial stability required to achieve growth aspirations.
Broader diversification of financing options – Access to a wider range of financing options and diverse pools of public funds including the global investor base. Listed securities can also be used to finance business acquisitions.
Higher public profile and visibility – Listed entities are focal points for investors looking at global investees across all sectors. Listed companies benefit from the higher profile and visibility engendered by increased coverage from research analysts, investment banks, media and investors.
Enhanced liquidity and valuation – Listing on a stock exchange provides an avenue for placing an objective market value on the business. There is proper price discovery as the price of the securities is determined by market forces through the interaction of all interested buyers and sellers. It also creates a liquid market for trading securities to unlock value.
Enhanced incentives for improved employee performance – Listing offers enhanced value in share option schemes which can help to promote long-term motivation and performance of employees and executives. Listed companies can thus potentially attract and retain the best talent.
Business sustainability and continuity – Going public institutes good corporate governance and sound business processes that assist in enhancing the company’s long term growth prospects and survival.
Most companies choose to be listed for recapitalisation purposes.
A recapitalised business tends to produce more quality products, employs more people and also pays taxes as and when they fall due. Listing therefore benefits the issuer of securities, the investing public, Government and the nation at large.