CAIRO: In a major step towards developing small and medium-sized enterprises (SMEs), Minister of Investment Mahmoud Mohieldin inaugurated Thursday Egypt’s highly anticipated SME bourse named the Nile Stock Exchange (Nile X).
Enlisting is expected to begin within one week, and actual trading will take place in two months’ time.
“With the SME stock exchange, these companies will be able to enhance their competence and improve their competitiveness [up to par], said Mohieldin. “The new bourse will help SMEs expand and increase capital through trading.
So far, ten companies have applied for registration on the bourse, with potential to increase to 100 in a short period of time.
“By registering, companies can further grow and team up with regional or foreign partners, explained Maged Shawky, chairman of the stock exchange. “Stock performance and evaluation of listed companies will be divulged.which can encourage others to invest in these SMEs. Hence, being listed on the bourse [in a way] helps promote the companies.
Guidelines to enlist on Nile X involve lower transaction fees than that of the regular bourse to encourage many companies to register. Minimum capital of member firms will range from LE 500,000 to LE 25 million.
In addition, registering will be through a nominated advisor who either owns venture capital or private equity in the firm. The designated advisor will represent the firm on the bourse and assist it in dealing with the stock market.
Trading on Nile X will be conducted through bidding as opposed to the usual buy/sell transactions. The highest bidder acquires shares in the company. “That method will help minimize manipulation of share prices, added Shawky.
The SME stock exchange, he said, was a natural evolution in Egypt’s growing economy. “Eighty percent of economic development in Egypt comes from SMEs, and they fill 75 percent of our employment needs, he pointed out. “Still, these enterprises need to increase their capital and funding to better improve their business. And from here the necessity of establishing an SME stock exchange derives.
To successfully establish the new bourse, officials observed and scrutinized international SME stock markets in London, New York, Italy, and South Korea in order to build on their success.
“We’re not reinventing the wheel. SME stock exchanges are present in many countries around the world and have had tremendous success, said Hatem Shafie, assistant to the chairman of investment and financial affairs at the bourse. “What we’re trying to do now is to [compete] with the rest of the world.
Officials foresee that Nile X will create a new class of assets and enhance financial capabilities of Egypt’s SMEs, further increasing employment rates and sustaining the country’s growth level.
“It will increase their portfolio investment and enable them to increase competitiveness on both a domestic and regional level, Shawky predicted.
