Connect with us

Hi, what are you looking for?

Business

Companies could use stock market to recover from Covid-19 disruption

The World Bank has projected that Sub-Saharan Africa could experience its first recession in 25 years due to the Coronavirus pandemic.

The negative projection is expected to have a damaging effect on the performance and competitiveness of most companies, with the impact varying across industries.

One of the major problems businesses are likely to face is a sizeable reduction in earnings, as most enterprises in the region have shut down in line with Extreme Social Distancing policies.

It is anticipated that the disruption will change the business world’s competitive landscape.

To this end, Botswana Stock Exchange Limited (BSEL) Chief Executive Officer (CEO), Thapelo Tsheole encouraged companies to utilize the stock exchange in the aftermath of the pandemic.

Advertisement. Scroll to continue reading.

“At company level, access to capital is very critical in any business cycle,” explained Tsheole, adding there are several ways entities can make use of the stock exchange to recover from the effects of Coronavirus.

Firstly, companies can issue and list shares through an initial public offering (IPOs) or private placement to raise capital for business operations.

“As a pandemic is systemic, it is highly likely that valuations will get depressed during the pandemic whereas the fundamentals of a business could be viewed differently by existing and potential investors,” said Tsheole, noting this often presents opportunities to both seekers and suppliers of capital.

“The timing could prove beneficial in terms of optimizing the capital structure of the company by accessing public funds through the stock exchange,” continued the CEO.

On the BSEL, companies could use available boards to list their shares such as Main Board, Venture Capital Board and the Tshipidi Board, which caters for Small and Medium Enterprises (SMEs).

Alternatively, instead of issuing shares, companies could issue and list bonds on the stock market.

Advertisement. Scroll to continue reading.

“A bond is a debt instrument acknowledging an obligation of indebtedness to a lender by the issuer of the bond for a specified period of time and with a predetermined interest rate or coupon rate,” highlighted Tsheole.

He revealed bonds are generally deemed less risky in comparison to shares because of the contractual obligations of the borrower to the lender as regards to payment of interest and repayment of principal, among other things.

Tsheole says enterprises could also use the platform to enhance their strategic performances as well as to optimize the capital structure and manage risks.

Click to comment

Leave a Reply

Your email address will not be published.

You May Also Like

Business

Business Botswana (BB) held the 5th Prosperity Africa Small Business Exporters Conference in Gaborone last week. The three-day conference, which attracted over 70 international...

Business

Friday saw the start of a powerful new partnership as Botswana Power Corporation (BPC) and Francistown College of  Technical and Vocational Education (FCTVE) joined...

Business

As part of their efforts to promote the country as a tourism hub, Cresta Marakanelo Limited (CML) sang Botswana’s praises at the Africa Travel...

Business

Health Generation adds zest to the HATAB Conference Botswana’s best juicers, Health Generation had plenty of admirers at the just ended Hospitality and Tourism...

Business

Coal mine set sights on Europe Morupule Coal Mine (MCM) are in hot pursuit of an exciting new partnership, with the coal producers in...

Business

There is a famous Chinese proverb that states life begins the day you start a garden. This certainly rings true for 41-year-old Unaswi Tafila,...

Business

Fallout from Ukraine invasion worries Minerals Minister Calling for divine intervention, Minister of Minerals and Energy, Lefoko Moagi has warned that the on-going Russia/Ukraine...

Business

Distribution company open Gabs office East Africa’s leading ICT distribution company, Red Dot has honed in on Botswana, officially opening an office in Gaborone’s...

Advertisement