- Future Financing Opportunities
Going public would provide the SMEs with equity financing opportunities to grow their business – from expansion of operations to acquisitions. The option of equity financing through equity market allows the company to raise long-term capital and also get further credits from banks or other financial institutions on the basis of additional equity infusion. The issuance of public shares expands the investor base, and this in turn will help set the stage for secondary equity financings, including private placements.
In addition, listed companies often receive more favourable lending terms when borrowing from financial institutions. Moreover, equity financing lowers the debt burden, leading to lower financing costs and healthier balance sheets for the firms.
The continuing requirement for adhering to the stock market rules for the issuers lower the on-going information and monitoring costs for the banks. Equity financing lowers the debt burden leading to lower financing costs and healthier balance sheets for the firms. Click to view.
- Increased sustainability of family business
As only about 30 per cent of the family businesses survive into a second generation, the listing on MSE guarantees the continuity of the firms. Click to view.
- Increased visibility and prestige
Going public is likely to enhance the company’s visibility. Greater public awareness gained through media coverage and publicly filed documents can provide SMEs with greater profile and credibility. This can result in a more diversified group of investors, which may increase the demand for the company’s shares, leading to an increase in the company’s value.
- Increased brand awareness
To say it with the words of Jeff Bezos, the founder of Amazon, “Your brand is what people say about you when you’re not in the room”. In today’s free market economy, brands compete with one another to dominate the market. They do this by either playing around with prices or improving the quality of their products. As competition becomes tougher, in order to still remain in the market brands need to take extra steps to keep customers interested. Having a listing on a stock exchange affords the company increased credibility with the public, having the company indirectly endorsed through having their stock traded on the exchange.
- Venture Capital (VC)
It has been seen that there is greater vitality of venture capital in stock market centered systems. The underdeveloped equity culture has made it difficult for companies to get into the VC phase as well as graduate from venture capital/startups phase to a scale of operations that would make them internationally competitive. A vibrant equity market would prove to be an added incentive for greater venture capital participation by providing an exit option.
- Liquidity for shareholders
Becoming a public company establishes a market for the company’s shares, providing its investors with a possibly efficient and regulated vehicle in which to trade their own shares. Greater liquidity in the public market can lead to better valuation for shares than would be seen through private transactions.
- Creates Employee Incentive Mechanism
The employees of the SME enterprises can participate in the ownership of their own company and benefit from being a shareholder. This can serve to ensure stronger employee commitment to the company’s performance and success.
- Facilitate growth through Mergers and Acquisitions
As a public company, company’s shares can be utilized as an acquisition currency to acquire target companies, instead of a direct cash offering. Using shares for an acquisition can be a tax efficient and cost effective vehicle to finance such a transaction.
- Encourages Innovation & Entrepreneurial Spirit
The ability of companies in their early stages of development to raise funds in the capital markets allows these companies to grow very quickly. This growth helps speed up the dissemination of new technologies throughout the economy. In addition, by raising the returns available from pursuing new ideas, technologies, etc., the capital markets facilitate entrepreneurial activities.
- Efficient Risk Distribution
The development of the capital markets has helped distribute risk more efficiently by transfer of risk to those best able to bear it. Thus, the capital markets ensure that capital flows to its best uses and that riskier activities with higher payoffs, are funded.
- Tax Benefits
Trading in listed instruments is exempt from Maltese capital gains tax and transfer duty.
Interesting tax incentives start being available in various European countries such as Italy and Spain, for private investors who wish to invest in financial instruments issued by SMEs and listed on the European financial markets.
Why to list in Malta?
- MFSA / MSE single admission application
- Strong investment culture in Malta + accessibility to EU investors
- MiFID compliant market
- listed instruments are exempt from Maltese capital gains tax and transfer duty
- English speaking
- Continuing obligations ensuring prompt disclosure of price-sensitive information and fair treatment of investors
Why run an IPO in Malta?
- Fast turnaround and response time
- Well networked environment
- Cost effective access to professional support services (at circa 40% of the EU cost)
- Safe, reliable and sound jurisdiction
- Trades in PROSPECTS listed intruments are exempt from capital gains tax and transfer duty
- Tax advantages for the listed companies (tax credit, accelerated amortization of the listing costs)
- Tax benefits for the private investors who choose to invest their savings in SME listed instruments