Fees levied by intermediaries driven by amount of work they do
Issuers advised to influence fees by being prepared
Report says BSE fees not a deterrent for companies to list
A diagnostic study on the cost of raising capital on the Botswana Stock Exchange (BSE) has concluded that the cost of raising debt capital is very low compared to that of equity capital.
The report found that holistically, the total fees associated with listing ranges between 1.0% and 4.7%. This was deduced from the information compiled from the prospectuses of companies that listed between 2007 and 2024.
“These were paid from the proceeds of the capital raised,” the report said adding that there is scope for these fees to be low on a case-by-case basis depending on the preparedness of the company, its state of corporatisation, amount of advisory work involved, the success of the offering and many other factors.
The report says the level of fees levied by intermediaries are driven by the amount of work they do. A company that has been duly corporatised, whose documents and records have been well kept and that can communicate its strategy and business model convincingly will normally take less time to come to market as advisors would comparatively have less work to do.
Applicant issuers, to a larger extent, are advised to influence the amount of fees they ultimately pay by being actively involved and being prepared. This includes availing information timeously, utilising internal resources to draft documentation, keeping records and documents in order, maintaining proper financial statements and accounts, proper governance structures, utilising electronic communication and encouraging shareholders to gain access to electronic media. The cost of printing annual reports is cited as the biggest compliance cost, as such there is no need for listed companies to print flashy and fancy annual reports when they have an opportunity to rather compile and print basic reports as long as all disclosures and updates are covered.
An important point highlighted is that the cost of raising capital need not be an upfront cost. Rather, the report says the cost could be paid, or recouped, from the proceeds of the capital raised.
“To some extent, the costs are also within the control of management or directors of the company as highlighted by the ways through which a company can improve efficiencies to mitigate the costs.”
The report said the BSE fees are not a deterrent for companies to list. There is consensus that the BSE fees are transparent and considered to be aligned with the level and quality of service provided by the BSE.
From a BSE standpoint, the report says competitiveness and efficiencies are a key priority and this can be noted from the initiatives that the BSE has implemented to eliminate or subsidise certain costs associated with compliance. At present, the market has a positive view of the BSE fees in the context of the investment in infrastructure, value-added services and enhancement in quality of service over the years.
“Progressively, there might be a need to re-assess the fees to strengthen competitiveness, or to reflect the value added by the BSE to its customers.”
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