CAIRO: Two companies have been listed on the Nile Stock Exchange (Nilex) and the third is pending approval, announced officials at the Egyptian Stock Exchange Thursday.
The listing committee approved Thursday the listing of Masria Card, which has an issued capital of LE 10.8 million, and El-Badr Plastic, with an issued capital of LE 1.7 million.
Two companies will be listed on the Nilex – the region’s first stock exchange for small and medium enterprises – through their nominated advisor Naeem Financial Investments (NFI), said Maged Shawky, chairman of the stock exchange, at a press conference Thursday afternoon.
The third company is Tarek Nour Holdings (TNH) – with issued capital worth LE 20 million – submitted a listing request early last week and is expected to enlist within a week, he added.
Active trading on the Nilex is expected to begin within a maximum of one year from a company’s listing date, with around five SMEs making their debut, the Egyptian bourse told Daily News Egypt earlier.
The Nilex was officially launched on October 25 in a bid to develop Egypt’s struggling SME sector.
“The Nilex will offer immediate support to existing small-to-medium enterprises. It will allow joint stock companies to become larger, expand their business and upgrade their competitive edge, Shawky pointed out.
He added that the SME stock exchange was a natural evolution in Egypt’s growing economy, as SMEs contribute 70-80 percent to GDP.
One of the main objectives behind establishing the new baby bourse is to help finance SMEs in Egypt that will eventually boost the country’s economic growth.
“A big chunk of economic development in Egypt is driven by SMEs, and that is why we have to look into ways to fund them whether directly or indirectly, said Mahmoud Mohieldin, minister of investment.
“We expect the baby bourse to attract not only local investors but also investors from large banking and multinational corporations based in New York and Jeddah, added Mohieldin.
Officials explained that the idea behind the Nilex is to make life easier for SMEs by adopting more flexible listing requirements than the main stock market.
Criteria including operating history, minimum paid-in capital, minimum number of shareholders, past financial performance and the number of floated shares are usually less stringent to minimize as many costs and procedures as possible for the SMEs.
“The Nilex attracted us because it offers lower listing fees and more flexible criteria than the main stock exchange that better match size of our company, Tamer Badreldin, CEO of El Badr Plastic Company, told Daily News Egypt.
He added that trading on the Nilex provide funding that will help the company embark on new expansion plans. The company, active in packaging products for pharmaceutical and food industries – is currently looking into expanding to catering to new industries.
According to Shawky, companies eligible to list on the new baby bourse will have an issued capital that is between LE 500,000 and LE 25 million. In addition to the capital requirements, a company will have to offer 10 percent of its shares to the market within one year of listing, at least 25 shareholders within one year, and a minimum of 100,000 shares floated.
Quarterly, semi-annual and annual disclosure regulations will be in line with those of the Egyptian stock exchange. Guidelines to enlist involve lower transaction fees than that of the regular bourse to encourage many companies to register.
Trading on Nilex, Shawky added, will be conducted through the “call auction system or bidding as opposed to the conventional buy/sell transactions utilized by the main bourse. The highest bidder acquires shares in the company.
Transactions in a call auction system are completed at the end of a trading session, where brokers record orders on the same security with different prices according to client orders.
Prices are determined at the end of a session based on a consensus value after a full set of orders has been made. “That method will help minimize manipulation of share prices, Shawky stated.
To be eligible for listing on the baby bourse, SMEs have to be sponsored by a nominated advisor. The nominated advisor may or may not own a stake in the firm it represents, but will guide and assist the company in dealing with the stock market.
The advisor will also be responsible for informing the Capital Market Authority (CMA) of the company’s disclosures, listing and pre-listing requirements.
The Egyptian stock exchange has so far approved 10 nominated advisors that include investment banks and private equity firms.
