07 Oct 2018

Citizen owned companies have been urged to spread the risk of ownership among a large group of shareholders through availing shares publicly and having their stock listed on the stock exchange.

Speaking during the Botswana Stock Exchange (BSE) opening bell ceremony that signifies the beginning of the trading day on the trading floor, BSE chief executive officer Mr Thapelo Tsheole stated that going public and offering stock in an initial public offering represented a milestone for most privately owned companies.

He said spreading the risk of ownership was especially important when a company grew with the original shareholders wanting to cash in some of their profits while still retaining a percentage of the company.

Mr Tsheole pleaded with local entrepreneurs to familiarise themselves with the stock exchange technicalities in order to tap into the benefits of listing. 

With knowledge on the importance of listing, Mr Tsheole said local entrepreneurs would appreciate that it provided an opportunity to raise capital to fund new projects and diversify business interests.

He highlighted that taking a company public reduced the cost of capital and gave the company a more solid standing when negotiating interest rates with banks, hence reducing interest on existing debt the company might have.

 Citizen owned businesses, he said, dominated the business landscape across both developed and developing economies as they were the major contributors to employment creation and the GDP, accounting for over 50 per cent of GDP and employment creation.

He emphasised that listing also afforded a company increased credibility with the public, adding that in the long term it would translate into a stable brand equity 

With regard to the current market update, Mr Tsheole said the majority of emerging markets were still on the negative with the local market being no exception. He, however, said it was the nature of stock markets. 

He said P1.2 billion had been traded and that an average daily turnover of about P6.7 million was experienced, adding that it was lower than the P11.5 million experienced last year.  

“One of the contributing factors to the lower turnover this year is the Botswana Public Officers Pension Fund (BPOPF) tender to realign and reissue mandates hence fund manages held on their portfolio,” he said.

He said domestic market capitalisation with regard to listed companies was P39.3 billion while the total market capitalisation stood at P410 billion, adding that 44 bonds were currently listed on the BSE.

 Of the 44 bonds listed, Mr Tsheole stated that the total market capitalisation for government bonds was about P10.2 billion while P4.2 billion was for corporate bonds.

Mr Tsheole, however, said there had been an improvement on the bonds market as BSE traded P268 million last year compared to P1.3 billion this year so far. Ends