PSX to assist SMEs in raising capital

Signs MoUs for businesses to get listed at the stock exchange

KARACHI: The Pakistan Stock Exchange (PSX) signed Memoranda of Understanding (MoUs) on Friday to enable Small and Medium Enterprises (SMEs) to get listed at the bourse and raise financing for their projects.

According to an official statement, the PSX is finalising the launch of its SME Board which will provide a platform for businesses to raise equity capital to fund their growth and expansion requirements.

"The PSX has endeavoured to make the listing procedure simple and easy," said the statement. "A public company with post-issue paid up capital of not less than Rs25 million and not more than Rs200 million is eligible to get listed on the SME Board. Meanwhile, to reduce listing cost, the listing fees of the exchange has been capped at Rs50,000," it added.

The MoUs were signed with Small and Medium Enterprises Development Authority (SMEDA) and Islamabad Chamber of Commerce and Industry (ICCI) on Friday for mutual cooperation and collaboration to facilitate access to equity financing for SMEs.

During the occasion, PSX and SMEDA representatives agreed that there was a dire need to promote small and medium businesses' growth in Pakistan as these account for 80% of non-agricultural labour force, but their ability to access bank financing was usually very limited, primarily due to high collateral requirements.

A core objective of the agreement was to generate awareness amongst SMEs regarding the benefits of listing in terms of not only obtaining financing for growth, but also to create proper corporate structure for long term business sustainability, improved branding, have greater credibility with buyers and suppliers.

At the same time, in order to protect investors, a number of steps have been taken by the PSX. For the SME Board, there will be a lock-in period on the shares of the sponsors, which means that the sponsors would have to retain their entire shareholding in the listed SME for one year and, for the next two years, would have to retain at least 25% of the paid-up capital of the SME.

Published in The Express Tribune, April 29^th, 2017.

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