Some 30 companies have decided to list their shares on the Karachi Stock Exchange. But why? What do they get out of it? There are, after all, tremendous costs involved in gaining a stock market listing and maintaining it.Quite simply, listing on the stock market is all about raising money to enable your business to expand. Imagine you have a brilliant idea for a new company but you don’t have the money necessary to buy equipment such as computers and office furniture. You might initially think about raising some money from family and friends and giving them a stake in your business in return. This is, in fact, the way many companies start life. Shares issued by companies not listed on the stock exchange are often referred to as ‘unquoted’.
But if you need money on a large scale or you are a small business looking to expand, you might need more than your close acquaintances can provide. At this stage some people look to borrow money from venture capitalists or the bank. Others decide to try and raise money from a wider group of investors through a stock market listing. These shares are known as ‘quoted’ or ‘listed’ on the stock exchange.
It is rare, however, that companies approach the market just once for money. As you flick through the financial pages of your newspaper you will often read about rights issues, share splits and share buy backs. These are all terms used to describe different ways companies raise money from investors and, pay it back.
IPOs/new issues
Bond issues
Rights issues
Stock splits and scrip issues
Share buybacks
