GSE reaffirms GAX as viable option for SMEs

Six companies have been listed on the GAX – which targets SMEs by providing far less demanding listing requirements and rules than the main board, the stock exchange

Managers of the Ghana Stock Exchange (GSE) have reiterated that the equity market for small and medium enterprises (SMEs), the Ghana Alternative Market (GAX), remains a viable option for raising growth capital at a lower cost.

Since its establishment in 2013, six companies have been listed on the GAX – which targets SMEs by providing far less demanding listing requirements and rules than the main board, the stock exchange.

A technical consultant for the GSE, David Tetteh – speaking at the second edition of the Money Summit organised by the B&FT, said GAX holds a lot of promise for businesses looking to raise equity capital.

“You have an opportunity to come to the GAX to raise capital. Sometimes, you go to banks and you are told to find equity before you are given debt; the GAX is the market for you,” Tetteh said.

Addressing concerns over the cost of undertaking the listing process, the technical consultant stated that the GSE also has the Listing Support Fund, introduced in April 2018, which allows for deferred payment of the initial listing cost. The arrangement also provides companies with advisory services during the listing process.

“If you are a company seeking to raise money on the GAX, you do not need to incur costs upfront; the Listing Support Fund can pay for the cost of your advisers that are looking to bring you to market, and after you raise the money you put the money back,” he said.

Unlike the GSE, where listed companies must have a minimum stated capital of GHC1 million, the GAX requires only GHC250,000 and does not require that a company have a proven track-record of profitability before listing.

“Over the years, we realised that on the main board, which was set up in 1990, some of the entrepreneurs felt they were for bigger companies and were somewhat intimidated about the prospect of getting onto the market with Unilever or StanChart; they felt that the rules were a bit too onerous and they were not there yet,” he noted.

Although to date the Exchange has only been able to list six companies, with a lot of promise for others to come in, Tetteh is confident that with incentives such as reducing the listing rules alongside lower compliance requirements, SMEs will be enticed to list on the GAX.

“As it is now, the stock exchange has done a lot of revision to the rules which will be coming out very soon. We have made a lot of changes to the GAX, and you will see a refreshed GAX very soon,” he further revealed.

“If you are an entrepreneur and you are looking to raise equity capital, you don’t need to incur costs. The stock exchange can work with you; help you find advisers and pay for the cost of the advisers to raise the capital. It is there for people to take advantage of,” he said.

GAX performance

Of the six listed companies on the alternate board, four have witnessed no price change over the past 12 months, with one gainer and one laggard.

Pesewa One has seen a 4.62% appreciation in price from trading at GHC0.65 beginning end-May 2021 to GHC0.68 at the end of April 2022: its market capitalisation currently stands at GHC3.4 million.

Samba Foods has remained flat over the past year at GHC0.55 with a market capitalisation of GHC3.29 million. The same applies to Meridian Marshall Holdings, which is trading at GHC0.11 and has a market cap of GHC10.6 million.

Hords Ltd. GH and DigiCut Production & Advertising Limited are also in the same category. The former has traded at GHC0.1 over the past 12 months and has a market capitalisation of GHC11.5 million.  The latter has traded at GHC0.09 over the past year and its market capitalisation stands at GHC10.7 million.

Intravenous Infusions Limited, however, has recorded a 20 percent drop in price from GHC0.05 to GHC0.04. It has a market capitalisation of GHC10.4million.

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Joshua Worlasi Amlanu and Ebenezer Chike Adjei Njoku
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