Public capital market fundraising can significantly increase a company’s room to manoeuvre in terms of financing. Using the funds raised, the given company is able to grow faster.
2. Flexible company sale
The primary goal of public listing is often not to raise funds, but rather for the original owners to sell a specific ownership stake. Of all the sales methods, an initial public offering (IPO) ensures owners the highest degree of flexibility.
3. More favourable borrowing options
Credit institutions’ confidence in the company increases, and thus it is able to borrow more and will likely be granted loans on more favourable terms.
4. Motivating executives and associates
A public market presence allows companies to set up performance-based incentive programmes for senior officers and employees that reward achievements with shares in the company (stock options, preferential stock purchase, employee stakeholder projects (ESP)).
5. Increasing business confidence
Going public also increases the trust business partners have in the company, thereby improving the company’s competitiveness in its own markets. For a public company, it can open doors that were previously closed to it.
6. Strengthening the brand name
As a result of a stock exchange floatation, public awareness of the company increases substantially, and its brand name strengthens. The media reports on listed companies on a daily basis, which means it is easier to place key messages in the press.
When a company is testing itself in the capital market, this also means that information is continuously available on how much value investors assign to the company. The public market communicates a continuous assessment of the company from the most authentic and credible of sources, the market.
8. Improving efficiency
Continuous testing in the market requires the establishment of increased financial discipline, which in turn has a positive impact on the company's efficiency.
What is the aim of setting up BSE Xtend?
International experience shows that regulated markets (stock exchanges) often prove to be overly difficult arenas for small and medium-sized companies, meaning that supporting their public operation requires a different framework. This is why many exchanges have decided to initiate specialised, more customised SME platforms for such businesses.
By creating a new market segment, the aim of the Budapest Stock Exchange is to establish a financing and trading platform that gives access to shares in the most successful medium-sized businesses in Hungary and the region. Thereby, Xtend contributes to developing the capital market infrastructure, increasing the number of transparently functioning companies and widening the range of available investments.