With smaller budget, people-friendly aid needed

The timing of a share float and its pricing are critical to its success, participants at a Port Moresby, Papua New Guinea, seminar on equities were told October.

Broker, Anthony Kirk from Morgan Stockbroking in Brisbane, Australia spoke to the participants about accessing equity markets, what they need to do and discussed many other issues associated with listing a company.

Kirk said listing a company has both advantages and “consequences”.

He said the advantages of listing are that companies have access to provision of capital, the public will be able to buy and sell shares in it, use it as a platform to transfer its ownership and management, may change its corporate image, and attract and retain employees.

He said some of the consequences of listing were that the equity or control in the company would be diluted, there would be increased responsibilities for directors, the company’s accountability

will be under a wider scrutiny, and there will be high expectations from investors.

Kirk told the participants some of the things that share float underwriters look if they are approached.

These include the reasons for listing, the type of business or industry the particular company is in, its maturity and growth prospects, the valuation and timing of the float, the pricing, who its directors and management are, and look at their prospectus.

He said the underwriter’s role is to understand the key investment points of the company and assess how the market will value the stock, taking into consideration things like investor perception of the industry/company, historical earnings performance and quality, its growth prospects, the prevailing stock market conditions and the outlook.

Kirk said a company that is planning to list, must also investors provide investors with alternative opportunities because

investors are looking for value.

He said underwriters would also pit the company against other similar companies that are already listed, to find out how the market was reacting to them, provide an expectation of how the company might be valued by investors.

However, he said whilst comparisons are helpful, the distinctions between the listed companies and those planning to list must also be recognised, adding that things to look out for include the sizes, maturity, and revenue mix.

Kirk said pricing would normally be done after all the evaluations, but it is “critical to the initial performance of the stock.”

He said the preparation of the prospectus would require detailed due diligence. Kirk said the timing “has a major impact” because the of time and resources required to prepare a prospectus, market conditions change so it is important to capitalise on market trends. (Post Courier) ■

Students march towards parliament to join anti-government protests in Papua New Guinea