Com­pa­nies shun the stock ex­change

Lesotho Times - - Business - Bereng Mpaki

R

EPRESENTATIVES of the Maseru Se­cu­ri­ties Mar­ket (MSM) have be­moaned the fact that there is still no reg­is­tered com­pany on the bourse de­spite road shows and bi­lat­eral meet­ings with prospec­tive clients since the launch of the bourse in Jan­uary 2016.

They said there were sev­eral ben­e­fits that the com­pa­nies could ac­cess by join­ing the MSM which is yet to list a sin­gle com­pany de­spite ex­ten­sive sen­si­ti­sa­tion and fi­nan­cial lit­er­acy pro­grammes.

Cur­rently in­cu­bated within the Cen­tral Bank of Le­sotho (CBL), the se­cu­ri­ties mar­ket was cre­ated to fa­cil­i­tate a cen­tralised trad­ing of fi­nan­cial se­cu­ri­ties to en­cour­age the wider share own­er­ship of pre­vi­ously pri­va­tised com­pa­nies in Le­sotho as well as fa­cil­i­tate rais­ing of medium to long-term cap­i­tal.

Speak­ing to this week, Sec­tion Head of Do­mes­tic Mar­kets De­vel­op­ment at CBL, Mote­bang Mphi, said prior to MSM es­tab­lish­ment, there were in­di­ca­tions of the need of such a fa­cil­ity.

This was ev­i­denced by the fact that some of the lo­cal com­pa­nies had started to of­fer part of their shares for sub­scrip­tion by the pub­lic to raise cap­i­tal and fund their op­er­a­tions.

Mr Mphi said buy­ers of shares and fi­nan­cial se­cu­ri­ties of­ten do not have the means to exit such com­pa­nies even when they wish to do so. He said they also can­not go back to the com­pa­nies that is­sued them as that would en­tail draw­ing down of their cap­i­tal.

“But through a stock ex­change it is very pos­si­ble and easy to find buy­ers will­ing to in­vest in such com­pa­nies,” Mr Mphi said.

“For a com­pany to list it should have a vi­sion to grow or ex­pand into new mar­kets or prod­ucts and be­lieve in ben­e­fits of list­ing, like the abil­ity and ease of rais­ing cap­i­tal, and in that case they will come to MSM to list their se­cu­ri­ties and find in­vestors.”

When a com­pany lists on a stock ex­change, it also en­hances its rep­u­ta­tion and grows its foot­print within the coun­try, re­gion­ally and across the globe.

Mr Mphi said how­ever, the main rea­son com­pa­nies list on the stock ex­change was to raise funds and spread the risk of own­er­ship among a group of share­hold­ers.

“Spread­ing the risk of own­er­ship is es­pe­cially im­por­tant when a com­pany grows, with the found­ing share­hold­ers will­ing to cash in some of their prof­its while still re­tain­ing a per­cent­age of the com­pany,” he said.

He said MSM stands ready to as­sist any com­pany on the pro­ce­dure nec­es­sary to be fol­lowed in or­der to even­tu­ally reg­is­ter, as the process can be cum­brous and, some­times lengthy.

“As MSM, we want com­pa­nies to come and reg­is­ter, and we are ready to guide any com­pany on what steps to fol­low un­til it is listed.”

He said some com­pa­nies had shown in­ter­est and dis­cus­sions to list with MSM were at an ad­vanced stage.

‘Mabakoena Moonyane, also from the MSM, added that the idea of shed­ding part of their share own­er­ship re­mained a chal­lenge for some com­pa­nies as own­ers seem to fear los­ing con­trol of their busi­nesses.

She fur­ther in­di­cated that with con­tin­ued di­a­logue with the pri­vate sec­tor, that mind­set was grad­u­ally chang­ing.

“This is a new ini­tia­tive and some com­pa­nies ap­pear re­luc­tant to give up part of their share own­er­ship be­cause they be­lieve they will lose con­trol of their com­pa­nies. But this does not have to be the case as found­ing share­hold­ers can still hold on to a ma­jor­ity stake and of­fer the rest to aspir­ing share­hold­ers to en­able the busi­ness to grow.”

Mr Mphi fur­ther in­di­cated that one of the ways to pro­mote the up­take of the bourse was through divest­ing the gov­ern­ment share­hold­ing in some of the pri­va­tised en­ter­prises in­dicted by Fi­nance Min­is­ter, Moeketsi Ma­joro, in the 2018/19 fi­nan­cial year bud­get speech last month.

“The MSM can be a pow­er­ful ve­hi­cle to raise cap­i­tal and di­lute the gov­ern­ment’s hold­ing of shares in pri­va­tised com­pa­nies.

“Dur­ing 2018, Gov­ern­ment will fi­nalise a plan to re­cap­i­talise the Le­sotho Post­bank di­rectly through the Maseru Se­cu­ri­ties Mar­ket by al­low­ing Ba­sotho to buy shares that were ini­tially held by gov­ern­ment. A broad as­sess­ment of an eq­uity di­lu­tion strat­egy will be un­der­taken with a view to open­ing up di­rect share­hold­ing to our peo­ple,” Dr Ma­joro said at the time.

For­mer Trade and De­vel­op­ment Plan­ning min­istry Prin­ci­pal Sec­re­tary, Ma­jakathata Mokoena Thakhisi, said that, “Stock ex­changes in other coun­tries are driven by the pri­vate sec­tor”.

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