Stock market is best form of raising capital

Business Page May 20/2008

Story: Charles Benoni Okine

THE Manager of First Atlantic Brokers Limited, Mr Kofi Sampong, has stated that capital raised through the stock exchange is the best form of raising funds to support the growth and development of companies.
He therefore asked companies not yet on the Ghana Stock Exchange (GSE) to enlist to be able to raise long-term capital to finance their growth and expansion programmes.
Speaking in an interview with the Daily Graphic, Mr Sampong, whose company is the lead brokers for the country’s first free-on-air television station, TV3, said “instead of companies going for loans from the banks, they could rather do their homework well, get their house in order and hit the stock market to raise capital”.
He said with rising interest rates the best option for businesses was to go on the stock market to raise what he described as “free money”.
The GSE has become a major source of raising long-term capital for many companies including banks and corporate bodies such as CAL Bank, Ecobank Ghana, Ghana Commercial Bank, Clydstone, and Goil which have embarked on massive expansion projects to either become or remain market leaders in their respective jurisdictions.
He said growing a company required long-term financing but unfortunately most of the banks and other financial institutions only give short to medium-term loans.
He said where a company had cause to raise additional money, it had an advantage to always go back to the shareholders to raise additional capital to finance an emergency that would eventually lead to growth in the company.
Asked to clarify the perception that companies enlist on the stock exchange and seldom pay dividends, he said shareholders need to bear in mind that the companies raise the money to finance long-term projects and until there were returns, it would be difficult to pay dividends.
He maintained that the stock exchange was the best way to raise capital for expansion and growth and entreated companies to try that avenue and said TV3 had taken the best of decisions to be listed on the GSE.
TV3 is 90 per cent owned by Media Prima Berhad (MPB), the largest integrated media investment group in Malaysia, seeking to reduce its shareholding to a simple majority.
MPB was established on September 23, 2003 and is listed on the Main Board of Bursa Malaysia (the Malaysian Stock Exchange).
The group has diverse interest in both the electronic and print media apart from content development, event management and outdoor advertising.