The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas Chamber of Commerce and Employers Confederation (BCCEC) yesterday confirmed it was in talks with BISX over a “fantastic new paradigm in how businesses are funded”.

Edison Sumner, the BCCEC’s chief executive, told Tribune Business that the proposed partnership with the Bahamas International Securities Exchange (BISX) would potentially open up new avenues for small and medium-sized businesses (SMEs) to raise equity financing.

Tribune Business revealed on Monday that BISX and the Chamber were in talks to forge a partnership that would ultimately kickstart the former’s ambitions to launch a ‘Junior Market’.

This market, known as the SAM or Small Alternative Market, would allow entrepreneurs and SMEs seeing $1 million or less in capital to raise the necessary financing through listing on BISX.

Mr Sumner said ‘access to capital’ was among the problems most frequently cited by Bahamian SMEs, and the proposed SAM market would give these businesses access to investors in a secure, transparent manner.

Apart from boosting BISX’s listings and trading volumes, Mr Sumner said the proposed initiative would also broaden Bahamian ownership of the economy by allowing persons to invest in SMEs via the SAM.

“We’re having discussions with BISX, Keith Davies, the chief executive and I,” the Chamber chief executive told Tribune Business.

“I think it’s a wonderful way for Bahamians to raise capital to expand small and medium-sized businesses. For the most part I think this will be a fantastic opportunity to access capital through BISX to support SMEs in the country.”

Mr Sumner emphasised that the discussions with BISX had yet to materialise into a concrete partnership, and there were “some things we need to work on” to formalise it.

“It’s a concept we’re developing,” he confirmed. “It’s something we’re hoping we can present to the Boards in the near future.

“This will also boost listings on BISX. Not only are they going to raise capital for small businesses, but it’s also going to give the average Bahamian an opportunity to invest in these companies so they can become owners in this economy.

“They can invest in someone else’s ideas and dreams so they can become owners in the country.”

Mr Sumner further told Tribune Business: “I do think it represents a fantastic new paradigm in how businesses are funded, and capital raised.

“One of the complaints we have from businesses is access to capital. To be able to go into the markets, expand the shareholder base, raise equity... there are a lot of spin-off opportunities available to those companies once we provide avenues to raising capital through BISX.

“It requires developing, but I think it’s something that’s going to work wonderfully for Bahamians across the country.”

The Chamber will likely act as the ‘bridge’ between BISX’s SAM market and Bahamian SMEs.

It is already heavily involved in the sector via its newly-launched SME Help Desk and work on the proposed Small and Medium-Sized Enterprises (SME) Development Bill - something that BISX’s proposed SAM market could also assist.

And the Chamber’s membership lists, and central role in private sector advocacy, potentially provide a fertile base from which BISX can source SAM listings.

The SAM facility would enable Bahamian SMEs to better access financing options, such as equity capital and securitised debt (corporate bonds and preference shares), which may not be available to them now.

SMEs would become less reliant on traditional financing sources, such as the banks, friends and family, and so-called ‘angel’ investors - a valuable development in an environment where access to bank credit has become much more difficult.

Micro listing facilities, targeting companies with smaller capitalisations than so-called ‘Main Board’ listings, have become increasingly popular and a major growth industry among global stock exchanges.

London has its Alternative Investment Market (AIM) and, closer to home, the Bahamas can draw on the precedent set by the Jamaica Stock Exchange (JSE). Its Junior Market for smaller cap stocks, which was initiated in 2010, was the JSE’s only growth area amid the recession.

BISX’s own version, the SAM, has been on the exchange’s drawing board since at least 2012. If the proposed junior market facility is successful, it would not just benefit the listed companies themselves and the wider economy, but BISX itself and the broader capital markets.

A micro listing facility would enable Bahamian companies, who choose to go this route, to build up a track record of financial performance with investors.

It would also help them to become familiar with listing, disclosure and compliance requirements, thus preparing them to eventually graduate to a BISX ‘Main Board listing’.

Mr Davies, speaking from BISX’s perspective, had told Tribune Business: “We now have an identified partner that we’re going to work with to make this a reality.

“One of the reasons we have not been able to bring it to reality is that we lacked a partner. Now we’re working together, and by the end of the first quarter we will be able to speak publicly to that.”