Most companies list by introduction:

RFCs must go for IPOs

For real capital market development:

Sanjeevi Jayasuriya

Ravi  Abeysuriya

More Registered Finance Companies (RFCs) are opting to be listed through introduction to meet the deadline of June 30. The Central Bank has made it compulsory for registered financial companies to be listed in the market for transparency. There are two methods of listing, by an initial public offering (IPO) or listing through introduction. The IPO is a long process and registered finance companies need to meet the June deadline.

Therefore, these companies are listed through introduction, Colombo Stock Exchange Chief Executive Officer Surekha Sellahewa told Daily News Business.

“Most of the companies are coming through the methodology of listing through introduction as this allows the companies to use the market mechanism later on by way of further issue, public issue, rights issue and private placement,” she said.

“The other reason for the registered finance companies to opt for listing through introduction is that these companies do not need further capital at this stage. They could enter the capital market to meet the company strategic plan in future,” she said.

There is no market activity when a company goes for listing by introduction. However, this cannot help as the registered finance companies need to meet the time frame given, Heraymila Securities Limited Chief Executive Officer Ravi Abeysuriya said.

“The listing through introduction will not create liquidity and market capitalization. There should be free flows in the market to ensure true value of the company and hence price and market mechanism is necessary,” he said.

These companies should enter the capital market over time to benefit both investors and companies. The listing of finance companies is an important step towards making information a public domain. The public scrutiny of deposit mobilizers is necessary and they have a right to know the financial position of financial companies, Abeysuriya said.