This article highlights the advantages of listing a company on the stock exchange in Kenya. Don’t look at this article from the perspective of the company and its shareholders. Look at it from the angle of you being a potential investor in it and a future shareholder. How secure are that one thousand shillings you sacrificed to invest in a prestige company? Will it really bring in the dividends?
When a company decides to go public for a number of reasons, it’s referred to an initial public offering (IPO). Ideally, the bank is selling its shares of stock to the public for the first time. Most companies do this with the aim of raising expansion capital and to become publicly traded companies which is a plus. The company is included on a listing in the stock exchange to trade publicly. The transition from private to public is very engaging, but in this world, nothing worthwhile comes on a silver platter. Here are some of the financial benefits of converting to you as a potential investor.
Overcoming borrowing constraints
The opportunity to tap public markets for funds for companies with large current and future investments and high growth cannot be ignored. With the growing population growth and the demand for necessities, a company at some point will have to expand its resources. In so doing, it gives you an opportunity to be a shareholder.
Low cost of credit.
Going public means all your financial information is out there. The company is an open book and the bank can easily tell its creditworthiness. In such a case the banks tend to be a little low with the interest rates and the amount of loan they can give to the company. To you, potential shareholder, you are dead sure that the company will be up and running to infinity.
Shares of a private company can be traded by an informed search at a cost. But the fact that the company is going public means, it’s being listed on NSE which is an organized exchange which is cheaper. Raising money from diverse investors factors in the liquidity benefit of being listed on NSE. Shares from public companies are much affordable and flexible for you.
Kenyans love to identify with some companies. Listing on a major exchange like NSE is some sort of advertisement for the company. This recognition builds confidence in potential investors as they will be interested in finding out more about the company because they have heard about it. You don’t need to worry about scams and fraud. Public companies are legit.
Once a company goes public, they become more creative and find possible alternatives to multiple financial opportunities in form of products. This may include, equity financing, convertible debts, cheaper bank loans. The beauty of this is that the returns may be much better to you as an individual depending on what product would you like to invest in.