New Fund Raising Alternatives For SMEs in Nigeria

The Nigerian Stock Exchange (NSE) recently inaugurated the Alternative Securities Market (ASeM) which is a trading platform for Small & Medium Enterprises (SMEs) in Nigeria to trade their equities on the NSE. Modelled along the Johannesburg Stock Exchange – AltX, the ASeM is a specialised board that will accommodate small and mid-sized companies with high growth potential seeking to access the capital market. The ASeM seeks to address major challenges of emerging businesses in Nigeria, which included, difficulty in accessing long term capital due to high cost of funds as a result of perceived high risk, informal nature of operations and inadequate accounting standards, controls and management of resources.

Another interesting new alternative will launch in 1 July 2013 – The first Over-The-Counter (OTC) Trading Platform in Nigeria – NASD. This platform is modelled along NASDAQ in the US and will be a ground-breaking solution if it succeeds and reaches the full potential as planned.

How many of the 17 million SMEs in Nigeria will embrace these new Fund Raising Alternatives?

 

ASeM

The companies currently listed on the ASeM include Adswitch plc, Afrik Pharmaceuticals plc, Anino International plc, Capital Oil plc, Juli plc, McNichols Consolidated plc, Rak Unity Petroleum plc, Rokana Industries plc, Smart Products Nigeria plc, Union Venture & Petroleum plc, and West Africa Aluminum Products plc.

Unlike equities on the main board of the NSE, companies who intend to list on the ASeM will not need the kind of stringent requirements that is fulfilled by the former. However, all proposed SMEs must comply with the IFRS standard of reporting amongst other obligations. ASeM also has the three pillars divided into Designated Advisers (DAs), Growth Ambassadors and Institutional Services.

Designated adviser programme is to support companies on ASeM in complying with post listing obligations and maintaining their listing status, while growth ambassador programme is to project the ASeM brand and support the advocacy and quotations drive of the Exchange. The institutional service is to assist listed companies to maximise benefit of their listing status.

For more information:

Download the ASeM Launch Presentation by the CEO, The Nigerian Stock Exchange – Oscar Onyema

Download the ASeM Guide to Listing

Visit the ASeM Section of the NSE website

 

 

NASD

NASD PLC is the promoter of a Trading Network that seeks to ease secondary market trading of all non-quoted securities in the West African region, thereby stimulating growth through more efficient capital raising processes. NASD PLC brings together Issuers, individual and institutional investors, accredited dealers, stockbrokers, banks, central clearing systems, private equity and venture capital firms and depositories with a view to increasing liquidity in the non-quoted segment of the long term funding market

To learn more, visit the NASD Website or watch the YouTube Video below:

I believe the success of the ASeM and NASD will depend on transparency of information, regulation and standardized financial reporting for the companies listed. That way investors can bride any asymmetry in information and utilize financial statements to form better investment opinions. Both options are indeed providing more options to SMEs in Nigeria but how many will take advantage of it?

 

What are your thoughts? Do you think SMEs in Nigeria will warm up to these options?

 






Comments