Tue | Feb 7, 2023

Williams tells entrepreneurs: Seek capital on the market

Published:Saturday | April 24, 2010 | 12:00 AM

Investment banker Christopher Williams is again urging Jamaican companies to look to the capital market for financing for their businesses.

"For too long we have looked only to the banking sector for financing. I feel that entrepreneurs need to recognise that through the Jamaica Stock Exchange there is access to the capital market which can provide both debt and equity funding for projects," said Williams, the president and chief executive officer of PROVEN Investment Limited, operational since February.

"The bank is not the only avenue to raise funds, interest cost of bank debt is in the high teens and accessing the capital markets for debt you will be able to raise money at lower costs," he said, at a forum organised by the JSE on different ways to raise capital.

Three months ago PROVEN went to the market with a private placement which netted US$20 million (J$1.79 billion).
The company is expected to be listed on the JSE in short order, but is first building out its portfolio of investments.
It has acquisition prospects but no deal as yet.

The JSE has some 40 ordinary listings, including two on its junior exchange.

As at Friday April 16, the JSE market capitalisation stood at J$566 billion; and J$919 million for the junior market.

Playing on the name of his company, Williams said businesses have to convince investors that they are worth the risk.

"You have to be proven in your business model. Not all business models will be attractive to the capital market," said Williams.Â
"The capital markets appears to be in love with the financial sector. So that companies like Proven that focuses on money management immediate has a jump start," he said.

Additionally, he implored young entrepreneurs to most of all look for some activities in which they have a competitive advantage.
"Because of the nature of the recession, projects exclusively dependent on the local economy is going And, the experience of team members that forms part of the business venture is also key.

"This was one of the biggest selling points from my experience. In preparing your company for accessing the capital market you have to take a critical look at your team, find the weak spots and determine how best to ensure the success."

The market is also more willing to take a bet on companies who have skin in the game, he suggested.

"The capital market is quite price sensitive...and prefers to buy at book value," said Williams. "The capital markets want entrepreneurs to come to the table with more than just talk. There is no better test of commitment than putting your own money on the line."