BENEFITS OF LISTING ON SME EXCHANGE

(i) Access to capital and future financing opportunities.

(ii) Going public would provide the MSME‟s with equity financing opportunities to grow their business – from expansion of operations to acquisitions.

(iii) Companies in the growth phase tend to get over – leveraged at which point, banks are reluctant to provide further credit. Equity capital is then necessary to bring back strength to the balance sheet. 

The option of equity financing through the equity market allows the firm to not only raise long – term capital but also get further credit due through an additional equity infusion. 

The issuance of public shares expands the investor base, and this in turn will help to set the stage for secondary equity financings, including private placements. 

In addition, Issuers often receive more favourable lending terms when borrowing from financial institutions.

INCREASED VISIBILITY AND PRESTIGE: Going public is likely to enhance the company‟s visibility. Greater public awareness gained through media coverage, publicity filed documents and coverage of stock by sector investment analysts can provide the SME with greater profile and credibility. 

VENTURE CAPITAL (VC): A vibrant equity market would provide proof to be an added incentive for greater venture capital participation by providing an exit option leading to a reduction in their lock – in period. 

LIQUIDITY FOR SHAREHOLDERS: Becoming a public company establishes a market for the company‟s shares, providing its investors with an efficient and regulated vehicle in which to trade their own shares. Greater liquidity in the public market can lead to better valuation for shares than would be seen through private transactions. 

CREATE EMPLOYEE INCENTIVE MECHANISMS: The employees of the SME enterprises can participate in the ownership of their own company and benefit from being a shareholder. 

FACILITATE GROWTH THROUGH MERGERS AND ACQUISITIONS: As a public company, company‟s shares can be utilized as an acquisition currency to acquire target companies, instead of a direct cash offering. Using shares for an acquisition can be a tax efficient and cost effective vehicle to finance such a transaction. 

ENCOURAGES INNOVATION &  ENTREPRENEURIAL SPIRIT: The ability of companies in their early stages of development to raise funds in the capital markets allows these companies to grow very quickly. 

EFFICIENT RISK DISTRIBUTION: The development of the capital markets has helped distribution risk more efficiently by transfer of risk to those best able to bear it.