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Interest In GAX On The Rise   
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Security market regulators are in a buoyant mood for a surge in stock sales on the Ghana Alternative Exchange (GAX) after raking in GH¢5 million in capital acquisition in the first six months of this year.

The performance of GAX -- an alternative market targetting small and medium enterprises -- has so far impressed investors, and is now considered the share market of choice after struggling to get companies to list when it was launched late last year.

The market has so far seen a mixture of three equities and two corporate bonds at a time when the main bourse, Ghana Stock Exchange, is finding it difficult to issue corporate bonds and get companies to list.

Director General of the Securities and Exchange Commission (SEC) Dr. Adu Anane Antwi, in an interview with the B&FT, said activity is picking up on the GAX and he is very optimistic that it will only get better.

“When we launched the GAX we weren’t getting anybody to list, but as soon as the first person came on board we realised that things were going to be better. We are also getting bonds on the GAX and this is good, especially when we are not getting bonds on the main market. This means the GAX is becoming attractive to issuers of securities.”

The first activity was by Izwe Loans Limited, a financial institution that listed a GH¢80million medium-term note programme last year. Currently, four notes totalling GH¢38.6million that offer an alternative premium over Government of Ghana securities have been listed.

Samba Foods, a food processing company, launched a successful IPO to raise GH¢2.5million and commenced trading in May, 2015 and the stocks currently trade at 73pesewas per share.

Parent company of Meridian Pre University and Marshall University College, Meridian Marshall Holding, also launched a highly successful IPO and raised GH¢2.5million through the issuance of 25 million new ordinary shares at GH¢0.10 per share, and is expected to commence trading later this week.

A week and a half ago, HORDS Limited -- a wholly-owned Ghanaian company that produces foods, food supplements, spray starch and detergents, launched an IPO to raise GH¢4million.

Priced at 5pesewas per share, the 80million shares on offer represent 70percent of HORDS Limited; and the company is hoping to commence trading later this month.

Just last week, afb -- a payday lender -- announced that is set to issue its first tranche of listed bonds to raise GH¢30million on the GAX over the next few weeks after receiving approval from the GSE, which granted afb approval to issue up to GH¢100million on the local market.

Another local manufacturer, Intravenous Infusions Limited -- a pharmaceutical company, has intensified its search for a new underwriter to help expedite processes to list on the GAX.

With all these activities, Dr. Antwi believes the GAX has potential to overtake the main bourse in terms of number of companies listed since the rules and regulations are less stringent and it is easier to list.

“The GAX is for the SMEs, and if these companies buy into the idea then the GAX can even overtake the main bourse and make the entire market more exciting.”

He explained that the slowdown of activities on the main bourse is due to the fact that many big companies are multinationals and can easily raise capital from either their parent companies or major shareholders, but the local SMEs do not have that leverage -- hence the need for them to list on the capital market.

“This is why the SME market will move faster because there is nowhere else to get money when all options are exhausted; and many of them are using bank loans to run their businesses, which is affecting them especially in this time of high interest rates.

“This means there are more incentives to letting the SMEs come to the market than there is for the heavyweights, who have deep pockets and can find a way to raise resources to run their operations without necessarily coming to the market.”

He is therefore  of the view that local entrepreneurs are accepting what the SEC, GSE and other analysts have been talking about, and are now interested in the capital market.

“GAX’s appetite for both investors and issuers is really high. This means the entrepreneurs are accepting what we have always been telling them; that you can’t own the company 100 percent when you want to grow.”

The Ghana Stock Exchange (GSE) created the alternative market to address complaints by SMEs about the stringent criteria which make it impossible for them to raise equity through the main bourse.

The GSE, through the GAX, targets SMEs with a minimum stated capital of GH¢250,000 and have been in operation for at least a year. The exchange has said that it will also consider start-ups that have the potential to be profitable.

Source: B&FT

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