Tech companies are scouting for capital market opportunities
View(s):The Securities and Exchange Commission of Sri Lanka (SEC) and the Colombo Stock Exchange (CSE) hosted a forum themed “Seed to Scale – Unlock Value & Potential” for tech companies recently in Colombo.
The forum is part of a broader initiative to engage and encourage tech companies to use the capital market as a source of funding to spur mid-to-long term business growth, the stock market regulator said in a media release.
Over 60 firms from this sector got the opportunity to engage with industry leaders and experts to discuss capital raising pathways for emerging tech leaders through a listing of debt and equity on the CSE.
The forum featured an in-depth presentation by Ashvanth Vijayaram, Senior Vice President –Head of Equity Capital Markets at Capital Alliance Holdings Ltd (CAL) that discussed the path to listing for companies, the benefits of listing as a low cost means of raising capital, how the secondary market can drive valuations for a listed company, as well as the opportunities and brand recognition that listing provides and how IT firms might leverage the capital market.
The main feature of the forum was a panel discussion and Q&A session that featured Chief Advisor to the President of Sri Lanka on Digital Economy & Chairman of Information Communication Technology Agency of Sri Lanka (ICTA) Dr. Hans Wijayasuriya, Chairman of the SEC Snr. Prof. D.B.P.H. Dissabandara, CEO of the CSE Rajeeva Bandaranaike, Managing Director of St. Anthony’s Industries Group Jeevan Gnanam, Ashvanth Vijayaram, with CEO and Founder of Surge Global Bhanuka Harischandra moderating.
The combination of perspectives and expert insights, from policy advisors, investment banks, start-up incubators and IT firms provided the forum participants with a comprehensive overview of the Sri Lankan capital market and how IT firms can leverage the capital market, create a digital economic ecosystem and ensure a long-term business legacy through listing on the stock exchange.
Panellists discussed several matters, including why the Sri Lankan capital market would be attractive for IT start-ups. They agreed that the domestic capital market offers IT firms an ideal ground that enjoys lower barriers such as cost and compliance requirements, better domestic brand recognition for home-grown firms, better valuations in Sri Lanka compared to listing abroad at the outset, a platform to demonstrate transparency and a trusted reputation upon listing and, the opportunity for Sri Lankan IT start-ups to leverage their domestic success when scaling through foreign markets.
Dr. Wijayasuriya, speaking at the forum commented on this further, setting out the advantages the Sri Lankan capital market offers domestic IT firms as well as outlining the optimal tech ecosystem, remarking: “Lot of start-ups, once they reach a certain scale, would shift their headquarters outside the country because of capital mobility and pool of capital available in that country. Capital mobility is key, especially in the tech industry. Only very few categories of tech can build scale in Sri Lanka from the domestic market.
Therefore, a majority of your capital has to be quickly scaled outside of Sri Lanka. The dream is that of Sri Lankan IPs and Sri Lankan headquartered companies becoming multinational. That’s when the digital ecosystem in Sri Lanka will really flourish and capital will come in to fuel Sri Lankan companies and IPs to go overseas. To make that possible, you need to allow for capital mobility, and that is something which I think very soon we will hear good news on. There would be special facilities for FDIs to fuel Sri Lankan start-ups to be fully mobile. That is capital to be used to invest overseas and expand your business, provided you keep your IP and headquarters in Sri Lanka.”
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