THE Securities Commission (SC) is considering the introduction of a trade sale board aimed at promoting private companies to investors.
The proposed board will feature a listing and search functionality, enabling micro, small, and medium enterprises (MSMEs) and mid-tier companies (MTCs) to showcase their business details for trade matching.
This initiative, part of the “Catalysing MSME and MTC Access to the Capital Market: Five-Year Roadmap” report, is designed to facilitate connections between companies and potential investors.
“This initiative aims to aggregate information on opportunities for private market investments, as well as potential interest from investors to enable trade sales and diversify exit options,” stated the SC.
As a strategic element of the roadmap to boost private market deals, this initiative is expected to enhance the infrastructure and mechanisms for fundraising and trade sales, thereby stimulating greater activity in the private market.
“Infrastructure to match demand and supply of capital within the private market is an important factor to facilitate fundraising, and merger and acquisition (M&A) activities,” it added.
Moreover, the SC plans to develop a factoring information platform for MSMEs and MTCs, promoting the use of factoring to expand their access to working capital. Factoring allows companies to meet short-term cash needs by selling their receivables for immediate cash injections from factoring companies.
“Greater transparency of factoring information will foster greater competition among factoring providers, which may lead to better financing rates.
“To accelerate adoption, public agencies can encourage MSMEs and MTCs in supply chains, to make use of factoring via this platform,” it further added.
Furthermore, the SC’s initiative draws from the experience of the Mexican development bank, Nacional Financiera (NAFIN) which developed an online factoring platform called Cadenas Productivas.
This platform connects large buyers with small suppliers, enabling suppliers to access working capital financing through factoring transactions with participating financial institutions.
The programme operates online, reducing costs and facilitating almost instantaneous transactions. – May 23, 2024
