AFB Ghana Plc, has officially listed its bonds on the Ghana Alternative Market (GAX), becoming the second after IZWE Loans to list bonds on the GAX; a move which the Deputy Finance Minister describes as a landmark development in Ghana?s corporate bond development.
Trading has thus commenced on AFB Ghana PLC?s debt securities, made up of new notes: AFB 100, AFB200, AFB300 and existing Notes S7, S14 to S22 on the Ghana Alternative Market.
The Ghana Stock Exchange (GSE) introduced the Ghana Alternative Market (GAX) for small and medium scale enterprises that may not meet the requirements for listing on the main burse.
In a statement read on her behalf by Mr. Joseph D. Chognuru, Director of the Financial Sector Division, Ms. Mona Helen K.Quartey, the Deputy Minister of Finance, said the success of the bond issued and its 30 per cent over subscription confirmed the high level of investor?s appetite in participating in Ghana?s capital markets, and indicated a vote of confidence in AFB Ghana.
She expressed confidence that the GAX platform would become a benchmark market for Small and Medium Enterprises (SMEs) in Ghana and the sub-region, adding that the success of AFB Ghana in raising capital from the bond market demonstrated that SMEs had the capacity which could be harnessed to deepen and broaden the capital market.
?This also emboldens Government to continue its quest for innovative ways of financing SMEs. I therefore urge all other potential SMEs to follow the steps of AFB in raising capital from this market,? she said, adding that using the capital market will make the market vibrant, more attractive and competitive in the sub-region.
Ms. Quartey noted that the listing of the initial tranche of over GH?64 million out of the GH?100 million on a range of different notes including Fixed Notes, Floating Rate Notes, Zero Coupon Notes, and/or combination of notes would broaden the investment profile and diversify portfolio in the fixed income market, and also lead to an enhanced liquidity of debt instruments on the GAX.
She also noted the critical role played by SMEs in the economic growth of developed and developing countries, including Ghana, and the challenges they faced in spite of their contributions; a major one being access to long-term financing.
?It is worth-noting that the establishment of the GAX for SMEs and start-ups is expected to unlock access to medium to long-term capital for the sector as well as raise savings and investments in the economy?.
She stressed the need to evolve ?broad and ambitious? programmes to promote the development of Ghana?s capitals markets as they were critical and beneficial to national economies but sensitive to institutional and macroeconomic variables like competition, business productivity, and protection of minority investors.
She urged corporate organizations and SMEs to take advantage of the opportunities in the capital market.
Dr. Adu Anane Antwi, Director-General of the Securities and Exchange Commission (SEC), said companies listed on the GAX enjoyed benefits like mandatory underwriting of the minimum offer by the sponsor, and access to the GAX-SME Listing Support Fund; a revolving fund to support the cost of raising capital and deferment of up-front fees, adding, they also did not pay for the approval of their offer documents by the SEC.
He advised AFB and other corporations to ensure they practised good corporate governance in their organisations as those who provided capital to corporations relied on the good corporate governance of the corporations they invested in or lent to, to provide them with actual accountability and responsibility.
Dr. Antwi said in order to enhance variety in the capital market and create a competitive and liquid market; there was the need to work towards expanding the investment vehicles by creating more financial products on the market.
?Currently the SEC is working to introduce Real Estate Investment Funds which will link the capital market to the real estate sector by providing the sector with long-term funds to increase housing delivery in the country,? he stated.
Mr. Arnold Parker, the Managing Director of AFB Ghana PLC, said the decision to list on the Ghana Stock Exchange was to create an avenue for the company to expand and list its corporate bond programme in order to salvage the fortunes of the company.
He explained that the company, about a year ago, set out to stabilize its balance sheet and eliminate its foreign exchange risks, as they were ?bleeding heavily? from the depreciation of the Ghana cedi and foreign exchange losses eroded significant portions of its net worth.
?After months of preparation, regulatory engagements and investor roadshows, we are listing what will now become Ghana?s first rated corporate bond? he stated, adding that the listing celebrated the achievement of its efforts to remain a sustainable business.
The first tranche will be used to pay off the USD debt owed to the company?s offshore counterparts.
?AFB?s aspiration to be a trail blazer for financial inclusion in Africa inspires us to constantly seek new and innovative ways of reaching our customers. This is a great company to invest in,? he stated.