As of 2016, small and medium-sized enterprises in Malta can access the capital markets through Prospects - a market of the Malta Stock Exchange (MSE) designed specifically for Small and Medium sized Enterprises (SME).
Prospects is regulated as a Multilateral Trading Facility (MTF), with admission granted by the Malta Stock Exchange
Prospects MTF offers a cost-effective opportunity for entities looking to raise up to €5 million per issue.
With over ninety per cent of all companies in Europe falling under the SME category, one of the challenges that these companies often face is the difficulty to access capital. The same can be said for Malta, particularly given the fact that family-owned businesses are pre-dominant in Malta and whilst the island has its fair share of smart and industrious entrepreneurs, their capacity to grow, either through merger and acquisition or organically, is very often curtailed due to limited access to cost-effective capital.
For an SME with smaller financing requirements, Prospects can be the perfect venue to raise capital either by way of equity or bonds. Prospects aims at facilitating access to fund raising, potentially offering a more cost-effective and easier-to-access alternative to other traditional means, such as bank loans. Moreover, admission to Prospects opens up the opportunity of eventual migration to a listing on the main market.
Key benefits of Prospects MTF for raising finance
The application fee for admission of equity or debt securities to Prospects is €5,000 whilst annual fees applicable for companies with a market capitalisation of up to €5 million, is €5,000 per annum. Consequently, admission fees as well as annual listing costs are significantly less when compared to the costs incurred by companies trading on the Main market of the Malta Stock Exchange.
Besides Prospects’ cost-effectiveness, the time to market is another key advantage. It is envisaged that the listing time is of 4 to 12 weeks, covering the compliance, preparation and review time. This reduced timeframe is achievable due to two factors:
- A simplified application document
- Approval for listing obtained directly from the Malta Stock Exchange’s committee
Appointment of a corporate advisor
In order to list the Prospects, the applicant will need to appoint a corporate advisor who’s role is to draft and submit the Company Admission Document, including all of the relevant documents, as well as to carry out the necessary due diligence on the applicant, also ensuring that proper compliance, transparency and accounting protocols are adhered to.
Financing for foreign companies also possible
Prospects is a Maltese market, however the financing platform is also available for overseas companies seeking an influx of cash for their business ventures. With Malta’s positioning as a leading global financial services provider, a well-qualified, English speaking workforce, excellent economic growth prospects and a sound banking system, Malta is the ideal choice for foreign small and medium sized companies looking for a trusted and affordable financing mechanism.
Strict guidelines are applied to ensure proper uptake and compliance by the applicant, and to ensure proper protection of the investor. Prospects is fully compliant with the Markets in Financial Instruments Directive (MiFID) which harmonises the regulation of investment services and Multilateral Trading Facilities (MTFs) at EU level.
Prospects MTF for SMEs in brief
- The entity must be an SME, as per EU definition
- In order to avail itself of the simplified document, the Company Admission Document, the Initial Public Offering shall not exceed €5 million
- The issue is to be purchased from less than 150 investors from any single jurisdiction
- As part of the Prospects application process, a Company Admission Document, together with the required documents must be submitted
- The applicant must have a minimum share capital of €46,587.
How can we help?
As one of Malta’s leading accountancy and advisory companies, Grant Thornton is able to offer such service, which will cover not only all the requirements set out by the Malta Stock Exchange, but would also follow the process through from origination, to listing and subsequent ongoing compliance so as to adhere to the Prospects’ rules. Grant Thornton can also supplement its services by offering assistance with all taxation, legal and accounting requirements.
The following Grant Thornton Malta team members are fully proficient with the Prospects market and have been endorsed by the Malta Stock Exchange as recognised corporate advisors: