Going Public: SME’s highs & lows

Companies go public for 2 reasons – a) raise fresh capital and b) maximize shareholders value

Small-Medium size Businesses, due to lack of knowledge in respect of financial planning & structuring  often fails to plan and invest in gaining expertise to develop this equally important aspect of their business, which is to implement balanced mix of growth & income strategies, which would give regular inflow of revenues as well as long term sustainable growth –

SME companies, in most cases, try to save money for obvious reasons, but they fall short in realizing the need to employ right expertise in gaining the much needed ability to think ahead, establish present & future needs, not just from meeting competition head-on, but also to realize the future work force within the family (owners & employees combined)

One of my objectives to gain from this writup is to gain attention of our bankers and stock brokers – please exercise caution while handling small cap companies – they are not equipped to be tested against rough trading & speculative, shortlived strategies – because for this very reason, small caps are shying away, and in the process losing out to gaining control over their capital situation – even from stock markets perspective, it is critical that we put money on small caps rather than going after, rather queing up behind handful of so-called market movers –

I also take liberty to protest politely to regulators, that they devote time & money in developing secured environment, that encourages small cap companies to come and play their part in development of capital markets, as their cumulative impact is far greater & bigger than blue chips – its time if see this as an integral part of our risk management protocol

Another known reason for small caps to go public, is to maximize shareholders value, being on this road, companies may not really need significant amount of new capital but to gain strength in terms of asset valuation based on present & future business outlook – however, there is another aspect to look at, which is to consolidate by way of mergers & acquisitions – we can either acquire non listed private companies through exchange of our listed shares to shareholders of private ownerships and broaden the capital base, similarly we have another area to look at, are opportunities of merging with other listed or non listed entities and be able to strengthen business – I feel we need to build on this subject so we create much needed awareness for small caps to look upto capital markets, not just as a platform to raise money but also to create opportunities for private small investors and other vibrant & motivated outfits

 

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Youths & Women Groups: challenges or opportunities

Its just like 2 people seeing out of the window and seeing 2 different things – the same issue we have today is the fact that some of us sees youths & women groups as steep challenges that are eating into our limited resources, and there is people who sees an entirely opposite picture, they believe that these 2 segments have been or being neglected, but both reflects strong energy & growth potential

In my opinion, its a case of believing in their capabilities and burning desire to be self reliant – its just a matter of showing them that we do care and we present ourselves as someone who is not only feel responsible but also allow our new generation and neglected women work force to lean onto us in this time of need & motivation

In a situation of no negative thoughts or pre-decided opinions, it’s not overly difficult to gauge the strength of these 2 sectors – lets first look at the scenario being developed in almost all developing countries – their population’s major share comprises of people within this age group of 18-35 years and high income segment is well under 10% – therefore we have an opportunity situation knowing these are young nations, BUT at the same time risk is equally great, because in the absence economic opportunities, confidence building, motivational environment, youngsters pose a much bigger threat of getting into criminal activities, which could result in degeneration of social health, economic growth, leave aside education & medical health

On a positive note, however, lets build a happy scenario – UNDP’s 2007 stats put Pakistan’s under 25 population at 103 million whereas there are over 10 million people between 20-24 years – its therefore not unfair to say that if we allow half of this 10million work force to get involved in any form of economic activity, assuming they have a small capital of $100 & they trade this money 3 times a week times 43 working weeks annually, we are looking at a cumulative impact of this group equivalent to $64 Billion, thats over 30% of Pakistan’s total economy size of $210 Billion (based on July 2011 figures)

Friends, we are not looking to conquer Everest or K2, we just need caring, motivated bunch of simple people, there is no need to be a Phd to know that when we are capable of raising billions in charities for food, education, health – we can also reach out to raise funds needed to get these kids self employed – if we target 5m youths needing $100 support – lets reach out to donors asking for $1m a piece, we are only looking to tap 500 donors – I am sure you all would agree with me that its not a heavy price to guarantee peace, harmony, contentment while evolving new economies!