By Bester KAYAYE
The Malawi Stock Exchange (MSE) has called on companies in the local extractive sector to list on the local stock market in a bid to have broad access to financing options through multiple-platforms the market is offering.
MSE Chief Operating Officer Kelline Kanyangala told Mining and Trade Review that the market has diverse instruments such as a debt platform which offers long term bond facility and is designed to spur growth of the private sector.
Kanyangala said strategic utilization of MSE debt platform could transform the scope of local extractive sector as the market guarantees steady working capital for long term investments.
She explained that currently MSE has three platforms that companies can utilize; The Main Board is for well established companies; the Alternative Capital Market Board targets small and medium enterprises while the Debt Board is for entities that would prefer not to use equity financing.
Kanyangala said: “We do need mining companies to join Malawi Stock Exchange to be part of listed entities because most companies out there are not aware of one facilities we offer. But we have equity platform and also a debt platform so there might be instances when companies would not need to list for equity or invite new shareholders in their firms but they can use the debt platform or the bond market.”
“What happens with the debt platform is that the firms will be able to borrow or raise funds from the public and normally it is over a long period of time and it aligns well with most of the programs when it comes to mining activities which are long term investment ventures, so you will find that if you have access to short term credit facility it is not really ideal and becomes more expensive especially with unpredictability of some of the activities occurring in the sector.”
“But you need a patient capital, the funds that you are assured you can repay over a significant long term period.”
Kanyangala said the requirements to list are not stringent urging mining firms that are listed in overseas stock markets but are operating in Malawi to also consider listing on the local bourse.
“On equity listing the minimum capital requirement is K500 million and most of these local mining companies are over the threshold considering the investment intensity of such works. We also need a guarantor, sound financial records with three years profit history and forecast for investors to appreciate what to expect when investing in the company,” she said.
Kanyangala said the minimum shares a company can issue to the public are 25% of the 100 shares so that the owners still hold a major stake of 75%.
She said MSE will continue the process of engaging firms including mining companies on the importance of being listed.
“We have had a number of engagements with potential issuers who had expressed interest to raise capital through the equity and bond platforms. We are to continue engaging more players to have them on board as it will also be exciting to have mining firms on the market,” she said
Established in 1994, MSE started equity trading in 1996 with National Insurance Company Limited (NICO) as the first listed firm and it has so far listed 16 companies.