There is possibility for 10 to 15 companies to get listed in the Colombo Stock Exchange (CSE) within the next year, an industry expert said.
"Sri Lanka's capital market has been performing well during the post war situation. Therefore, another fifty companies could enter into the capital market in the years to come," he said.
More companies entering into the capital market will provide them a better opportunity to raise capital in a cost effective manner. It also helps the company to have credibility, a valuation and tax benefits.
However, the participation of Small and Medium Entrepreneurs (SME) in the stock exchange is comparatively low.
The Securities and Exchange Commission (SEC) is encouraging more SMEs to get listed in the CSE as there is much scope for this segment to expand their business. When companies are listed in the CSE, it will help to attract more foreign and local investors to capital market activities.
Although market capitalization of the CSE has increased over 10 fold since 2002, our market remains very small in relation to regional markets. One of the reasons for this is that the number of listed companies during this period remaining static, Securities and Exchange Commission Capital Market Development and Research Director Vajira Wijegunawardane told Daily News Business.
However, during the post war scenario we have seen encouraging signs of six companies raising finance by way of IPO's with more being in the pipeline.
"It is important to focus on encouraging large companies to get listed in the CSE as they would raise capital, while making a big impact on increasing the market capitalization of the CSE and add liquidity in the market," he said.
The Director said State owned enterprises too should be encouraged to tap the capital market for fund raising.
For example the Bank of Ceylon raised finance with their listed debenture issues.
Another option which needs to be pursued has been done very successfully is to find fund infrastructure projects through the capital market. This method is being practised in other countries in the region,especially in India to raise part of their infrastructure development funds.
source - www.dailynews.lk
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