BSE upbeat on listings

SHARE   |   Tuesday, 21 March 2017   |   By Kabelo Adamson
Thapelo Tsheole Thapelo Tsheole

On the back of the recent listing conference the Botswana Stock Exchange CEO Thapelo Tsheole is confident that their efforts of luring local companies to list will bear fruit. He fields questions from KABELO ADAMSON

Are you satisfied with the impact the first listing conference made?
TSHEOLE: The Inaugural BSE Listings and Investment Conference came on the backdrop of the need to educate the market about listing and investing in the stock market. The conference certainly succeeded in demystifying the misconceptions that exist about listing on the stock exchange and provided a platform where companies can learn about the process of listing on the Botswana Stock Exchange (BSE). What made the conference dynamic is that there was a mix of listed and unlisted companies, corporate advisors as well as capital market participants to deliberate on the different topics of discussion. Certainly companies are becoming more and more knowledgeable about the process of listing, and outside of the conference we continue to engage companies on one-on-one basis.

Of the companies that were invited during the first edition of the conference, has anyone of those made serious intentions to list, possibly in the not so distant future?
TSHEOLE: We have been engaging with various companies that are at different stages of growth. While there is an interest to list we understand that there is a process that is involved depending on whether or not the company will need some restructuring.

How many of those that were invited to the 2016 conference you think have what it takes to list?
TSHEOLE: At the BSE we believe that companies can use the exchange to raise the capital needed to expand their products and services which is why we invite them to the annual conference to educate them about the importance and process of listing. We believe that the companies that we invited have the potential to list in the short to medium term.

Did the BSE invite the same unlisted companies or your invited the new ones this year?
TSHEOLE: This year we invited a mix of companies that attended last year’s conference and those that were attending the conference for the first time. This is because every year the topics of discussion and the approach to delivery are different and as such that it appeals to companies across the different levels of understanding.

What criterion is used for invitation?
TSHEOLE: As indicated, we invite companies that have the potential to list in the short to medium term and we try to have as many companies as possible attending which is why we increased the conference delegates from 250 in 2016 to 400 delegates in 2017. However, this year there was an emphasis on how SMMEs can use the stock exchange for capital raising especially now when the BSE is working on creating a board that will cater to SMMEs who are not able to meet the requirements of the Venture Board.

Only two companies listed last year, do you believe the set target of 30 listed local companies by 2021 is achievable looking at the latest trends?
TSHEOLE: It is achievable because what we are saying is we want to increase the number of domestic companies listed from the current 24 companies to 30 companies by 2021. We have a market development plan in place and part of that is engaging companies extensively during the annual BSE Listings and Investment Conference and on a one-on-one basis. We also have BSE open days that we host to educate companies and investors. The BSE will host Open Days in 5 locations around Botswana in 2017. It is our belief that this will translate into listings.

In your opinion, do you believe local companies are eager to list, if not, besides listings conference, how do you convince them that listing is a big step in growing their entities?
TSHEOLE: We engage in a rigorous public education programme that includes five open days in 2017, hosted at the following locations; Serowe, Palapye, Kasane, Ghanzi and Gaborone. We also engage companies on one-on-one basis and we avail material that companies can use to learn about the process of listing. Judging by the fact that companies are always eager to attend these forums and are willing to engage with the BSE, there is interest. The key message that we share with companies is the advantages of being a listed company which predominantly gives listed companies access to capital. The various examples of listed companies that are contributing to economic development and employment in Botswana makes companies aspire to list.

We understand that you are in the process on introducing a board specifically for the SME’s; how soon can the public expect it?
TSHEOLE: We have multi-tier market that is designed for enterprises that fall within different stages of growth and of different sizes and risk profiles. Only two boards, the Main Board, and the Venture Capital Board have been catering for enterprises that list on the exchange with the Venture Capital board having less stringent requirements to those of the Main board. The BSE has now decided to launch the Tshipidi SMME Board to satisfy the capital-raising needs of Small Medium and Micro Enterprises (SMMEs) by providing a direct financing platform for enterprises with a growth potential. This will address the challenge of access to capital that SMMEs face. The Tshipidi SMME Board will cater for the enterprises that are not able to meet the requirements of the existing boards by providing less onerous listing rules that are appropriate for their stage of development while at the same time maximising market efficiency, facilitating risk control and developing the capital market. It is worth noting that as the BSE we have the responsibility to develop the market and we continually review the current infrastructure and its suitability to act as a catalyst for growth, particularly that of SMMEs given that Botswana is predominantly an SMME-dominant economy. The Tshipidi SMME Board will be launched sometime in 2017 and the drafting of listing rules for the board which will be followed by extensive consultations has commenced.

In this case, what would qualify a company to be an SME; turnover?
TSHEOLE: The rules for the Tshipidi SMME Board are still being drafted.

Companies that eventually list are large scale ones that can afford all the processes. In the case of the SME’s is the BSE going to scrap off some of the processes to allow a smooth procedure?
TSHEOLE: The Tshipidi SMME Board will certainly be different from the existing boards. As indicated the BSE has a multi-tier market structure, currently comprised of two boards being the main board which is for larger companies and the venture board which has less stringent requirements for companies that are listing. The SMME Board will have less stringent rules than the Venture Capital Board and therefore will be more accessible to companies that find it difficult to attain the requirements of the Venture Capital Board. The rules are being drafted and in them will be the requirements to list on the SMME Board.

What more does the BSE have in place for the public?
TSHEOLE: We have Open Days around Botswana, five in 2017 and this year’s locations are Serowe, Palapye, Kasane, Ghanzi and Gaborone. We are actively using social media and our radio Programmes to disseminate market information. We also have an up-to-date website that the public can access.

Are locals purchasing shares at satisfactory levels?
TSHEOLE: Local retail investor participation has grown from three percent in 2008 and has ranged between eight percent and 15 percent in recent years.