PSX to add more companies to GEM board

Nearly one dozen firms are at different stages of listing process

KARACHI:

The Pakistan Stock Exchange (PSX) is in the process to list an additional three to four growth companies on its separately developed Growth Enterprise Market (GEM) board by the end of December 2022.

To achieve this, the bourse has eased the eligibility rules for investors to trade the growth stocks which also carried high risk of losses last week. Around one dozen small and medium-sized enterprises and tech startups are at different stages of the listing process.

“The breakup suggests that two companies are in process to enter the GEM board at present,” PSX MD and CEO Farrukh H Khan said while talking to The Express Tribune.

Supernet is scheduled to hold book building process on April 12-13, 2022 to calculate a share price. Coeus Solutions Limited, which delayed its initial public offering (IPO) in the wake of global geo-political and domestic political situation, is yet to announce the new date for listing.  

Besides, three to four more companies have applied for the listing. They are at different stages of getting listed at the PSX GEM board. “The total number of companies at the GEM board will be around six or more by the end of the current calendar year 2022,” Khan said.

In addition to this, the Pakistan Software Export Board (PSEB) recently appointed AKD Securities as its lead manager to get the first eight tech startups listed at the GEM board, he said.

Earlier, PSEB signed a memorandum of understanding (MoU) with PSX to make at least 40 tech startups available at the GEM board. Around eight tech startups are yet to apply for the listing, he said.

At present, two companies are listed at the GEM board ie Universal Network Systems (UNSL), a logistics firm operating under the brand name of BlueEX, and Pak Agro Packaging. They have cumulatively raised equity worth Rs644 million by offering their shares to the investors at PSX.

The GEM board has enabled young enterprises to raise capital through the Pakistan Stock Exchange. At the same time, the board has provided exit to early stage investors in the startups. The investors in startups mostly invest to exit at a suitable time but remain curious about the timing of their exit. The GEM board has provided them a way to exit whenever they want. They initially invest funds for three to five years, Khan said.

During three to five year period, the companies listed at GEM board attain maturity to move to the main board at PSX, he said. 

The two companies listed on GEM board have been depicting healthy volumes in the secondary market. Investors have traded around 207 million shares of the two companies since their IPOs in the past quarter.

Rules for investors simplified

Khan said that the stock exchange had simplified rules for investor to become eligible for trading GEM board stocks.

The main rule for accredited investors in GEM board has remained unchanged, as the net worth of the investor should be Rs5 million as mentioned earlier. However, “the process to mark and identify accredited investors has been eased for brokers,” PSX MD said.

According to the amendments made in the concerned rules notified last week, investors can now self certify themselves as accredited investors in GEM board. Earlier, brokers were liable to certify individuals as accredited investors for GEM board, Khan said.

“This is the minimum criteria. If brokers feel someone is exaggerating their worth, they can ask investors to submit the concerned documents,” he said.

The documents may include bank statement, wealth statement and tax returns which were earlier required by brokers to certify individuals as accredited investor for GEM board.

Published in The Express Tribune, April 7^th, 2022.

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