The Tribune

By NEIL HARTNELL

Tribune Business Editor

ESTABLISHING a micro listing facility for small and medium-sized Bahamian companies seeking up to $1 million in capital is among the "major things" the Bahamas International Securities Exchange's (BISX) chief executive is hoping to accomplish by June 2012, expressing hope the exchange could "partner" with the newly-elected PLP government on this and other initiatives.

Describing the junior or incubator listing tier as one accomplishment he wanted to "truly try and achieve" while with BISX, Keith Davies told Tribune Business he also hoped the Christie administration would move to list the Government's outstanding $3.2 billion worth of debt securities on the exchange.

The BISX chief executive added that he had "a structure in place" as to how the exchange's junior/micro listing facility would work, explaining that it would provide a "welcoming environment" in which entrepreneurs could pitch their ideas/enterprises to potential investors.

Acknowledging that Bahamian-owned small and medium-sized businesses accounted for 95 per cent of all companies in this country, Mr Davies said it was vital that the exchange helped to improve their prospects for success and long-term sustainability.

"For me, it's a no brainer," he told Tribune Business of the need for BISX to establish a junior/micro listing facility. "It has to happen. I've had several key things I wanted to try and achieve with BISX, and this is one of those things I want to truly try and achieve during my tenure.

"The timeline was always to get it done by the end of June. I'm trying to get some major things done by the end of June."

Mr Davies acknowledged that the recent general election cycle, coupled with recent capital market developments such as the Arawak Cay Port listing, had proven a distraction and could set his timetable back.

Yet he added: "We have a structure in place in terms of how we want it to run. The problem is getting over that hump of getting people together to say: 'What do you think?'"

Emphasising that BISX was now focused on building and "finishing what we started", Mr Davies said the proposed micro/junior facility was targeted at Bahamian companies and entrepreneurs who had built-up a loyal customer base or come up with "an innovative idea", but "had no funds" to expand or make the vision a reality.

"It creates an environment that is welcoming to them, because it encourages outsiders to invest their capital, and does not require them to come up with the sweat equity, money in hand," Mr Davies told Tribune Business.

He emphasised, though, that not every company would be successful in attracting the finance it was seeking, meaning that the entrepreneur's planning and participation in the capital raising process would be key.

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, is forecast to attract nine new listings in 2012 - almost doubling the number of listed companies from the existing 12. It has been the JSE's only growth area amid the recession.

Mr Davies has previously told Tribune Business that a micro listing facility would enable Bahamian companies, who chose 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 and compliance requirements, thus preparing them eventually for a BISX 'Main Board listing'.

And a micro listing tier will also provide small and medium-sized Bahamian companies with alternative avenues for raising capital, such as equity offerings, bonds and preference shares. Such options are likely to be especially valuable in an environment where commercial bank lending, and other traditional funding forms, have largely dried up due to the global recession.

Mr Davies's plans also appear to tie-in well with those of the PLP government. Its 'Charter for Governance' emphasises that it will "seek to ensure the launch by the Bahamas International Securities Exchange (BISX) of a micro-listing facility" to aid the development of small and medium-sized businesses, and provide liquidity to support this market.

Pension reforms, and the eventual listing of entities in which the Government has equity stakes on BISX, are also designed to boost the exchange and wider Bahamian capital markets.

Mr Davies said it would be "interesting to see whether we can partner with them [the Government] some more" on various capital market initiatives.

He added that it was the first Christie administration that came up with the Capital Market Sector Policy and, now that government had been re-elected, "hopefully the goal will to continue what they started with respect to placing government securities in the secondary market as well as the completing the establishment of a primary debt market".

Mr Davies told Tribune Business: "Right now, there is no central marketplace where bids and offers are placed for individually-held government securities, where investors can give indications of intent and formal buying from persons holding those securities can be done.

"These are nation building, Bahamian-centric initiatives, and we are prepared to work with the Government in any fashion to further Bahamian development."