Oct 14, Colombo: Sri Lanka's industry leaders are encouraging the companies in the island to list on the Colombo Stock Exchange (CSE) to boost growth.
Listing a company with the Colombo Stock Exchange (CSE) can provide the boost, a fast-growing company needs, several industry leaders said in a wide ranging panel discussion at the Issuer Relations Forum held at the Cinnamon Grand last Friday (11).
The Chairman of CSE Krishan Balendra has noted that the market capitalization of the CSE amounts to less than 30% of Sri Lanka's annual GDP whereas in other markets in the region on average it amounts to 180% of GDP and countries like Malaysia and Singapore market capitalization is even exceeding 200% of their GDP.
The forum was therefore, aimed at engaging and encouraging companies to list on the CSE, Balendra added.
Representatives from top firms such as the Akbar Brothers, Allianz Insurance Lanka Limited, Asian Hotels and Properties, Amana Bank, Ceylon Biscuits Ltd, Brandix Lanka, Hameedia Stores, Jetwing Hotels, Richard Peiris, Softlogic Retail and the Tudawe Brothers attended the event.
Speaking at the forum, the Chairman of Laugfs Holdings plc, W K H Wegapitiya said various "myths" exist in the market when listing on the CSE, including giving up control of the company, as well as the need to disclose everything about the way the company is run.
The panelists emphasized that disclosures too were limited and there was no need to give away trade secrets.
However, all the panelists have agreed that some preparation needed to be done before listing a company on the CSE, from streamlining systems and processes to changing the culture of the company.
They have explained that all these challenges can be overcome with the help of several organizations who lent a helping hand.
They pointed out that the companies listed were able to grow at a much faster rate than if they had decided not to list.
Assistant General Manager of Regulatory Affairs at CSE, Renuke Wijayawardhane addressing the forum pointed out that companies which successfully listed could raise long term funds, especially if they were looking to fund further growth without raising their debts.
In addition, listed companies could tap into a huge investor base, and would no longer be limited by the owner's capacity to introduce capital, Wijayawardhane pointed out.
Apart from this, the company's corporate profile would be enhanced, with plenty of publicity along with the publication of financial statements. Listed companies are also usually valued higher compared to unlisted companies.
The CSE official also noted that companies need to consider several factors before deciding to list on the stock exchange, since to be listed on CSE, companies need stated capital of Rs. 100 million, a one year record of operations and positive net assets for the last financial year as well as a public float of 10%.