Businesses must explore the stock market to raise patient capital

Businesses must explore the stock market to raise patient capital

Last week, the Ghana Stock Exchange (GSE) formerly admitted Kasapreko PLC’s GH¢600 million note programme to the Ghana Fixed Income Market (GFIM).


Consequently, the local bourse officially declared series one tranche one and two totalling GH¢151 million of the programme officially listed on the market.

It becomes the single largest capital raise on the Ghana Fixed Income Market by a manufacturing company in the country.

This transaction has an interest rate of 26 per cent, which is way lower than the Ghana Reference Rate of about 32 per cent.

This issuance is structured as a three-year senior unsecured note with a floating rate coupon and bullet repayment of principal at maturity. 

It will be issued in tranches to refinance expensive short-term debt, support working capital, and refinance capital expenditure.

For the company, which has grown from humble beginnings to become not only a local giant but a formidable player in the alcoholic beverage industry on the continent of Africa, this is the first step towards diversifying the funding mix and optimising the maturity structure of its debt funding.

To us at Graphic Business, although this is a debt, the involvement of the Ghana Stock Exchange is a clear testament to the fact that the local bourse is the right source to raise cheaper capital as compared to what the banks offer.

Particularly at a time when borrowing from financial institutions has become highly unattractive and thwarting the resolve of small and medium-sized companies to raise capital to refinance their operations, the GSE comes in handy and the move by Kasapreko PLC should ignite that passion among players in the SME sector to do same.

Earlier before tolling the bell to officially announce the listing of the programme, Managing Director of the GSE, Abena Amoah, described the move by Kasapreko PLC as a bold step towards its quest to dominate, not only the Ghanaian market, but to be a major player on the continent and the world at large.

She said the presence of Kasapreko PLC on the stock market was a testament to the fact that the local bourse was a reliable source for raising patient capital to expand businesses, a comment the Graphic Business fully associates with.

If anybody is in doubt, the GSE market, in spite of all the challenges within the economy, recorded a mixed performance in 2023, with composite index ending the year with a gain of 28.08  per cent, while the financial index ended the year with a year to date loss of 7.36 per cent.

We are aware that the 28.08 gains made by the composite index represented a remarkable turn-around after making a loss of 12.38 per cent in 2022.

The Financial Stock Index, however, extended its 2022 losses of 4.61per cent to 7.36 per cent in 2023. Volumes, value, and number of trades also saw a dip, compared to the figures recorded in 2022.

The cumulative volume traded amounted to 579,675,315, valued at GHS818.1 million, indicating a decline of 56.59 per cent and 50.11 per cent, respectively, compared to the same period in 2022.

Despite a marginal 0.08 per cent decrease in the number of transactions, there was an increase in market capitalisation, rising by 14.55 per cent from GH¢64.5 billion at the end of December 2022 to GH¢73.89 billion by the close of December 2023

The Graphic Business after analysing the performance of the GSE, can say that the local bourse is a must-go place for businesses which intends go raise patient capital.

If Kasapreko PLC has done it in style, others can also do same and we trust that with the support of true SME focused banks such as Consolidated Bank Ghana (CBG), lead arrangers for this facility, other small and medium sized companies can follow suit.

It is the hope of the paper that Kasapreko PLC and all other potential companies yet to list will follow and adhere to laid down rules of the GSE.

In this instance, compliance is the word because without that, they cannot be admitted. We, therefore, expect that businesses in need of patient capital will comply with the rules and be admitted to list. 

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