The life cycle of a company is not dissimilar to that of a person, with businesses facing four phases – starting up, growth, maturity and decline.
To prevent a business encountering the decline phase, smart owners will have a clear plan in place, one defining its goals, including its mission and vision – while most important is finding a source of capital for expanding the company’s potential.
An ambitious entrepreneur will not merely aim for their company to just survive in the domestic market and perhaps regionally, but for it to become a multimillion or even billion dollar concern.
And the best way to find a source of financing that is reliable, resourceful, low-cost and long-term – as well as providing benefits to business owners, companies, society and the national economy as a whole – is through the capital market.
To transition between the growth and maturity phases, some companies find strategic partners or open up to new investment from institutional investors.
In this phase, business owners can raise capital from the public through the stock market, in a process known as an initial public offering (IPO).
ACLEDA Bank Plc – one of the leading banks in Cambodia – successfully completed its IPO and listed on the CSX in May 2020, with it currently valued at more than $1.35 billion.
The success of the local bank – owned by Cambodians and with a Cambodian management team – has and continues to create jobs for many Cambodians, reducing unemployment, and contributing to society and the national economy.
And CamGSM Plc – more famously known as Cellcard, the leading player in the Kingdom’s telecommunications sector – became the second Cambodian company after ACLEDA Bank with a value of a billion dollars following its successful IPO in June 2023.
These successful listings demonstrate the strength of the Cambodia Securities Exchange (CSX) as a vehicle for local companies to use to expand the potential and scope of their business.
Companies can enjoy a range of advantages from listing on the CSX, such as:
• Receiving a fair valuation – reflecting its strengths and competitive advantages, as well as the quality of its products/services and the value of the company – in a relatively short period of time.
• Benefiting from increased credibility when completing an IPO. Having undergone intense scrutiny to ensure that what the company is reporting about itself is correct, it will be recognised that it is run transparently and with professional ethics, good corporate governance and accountability.
It also shows that the business is well run, with its management experienced, knowledgeable and skilled.
• Increased public attention, with much media interest generated as news outlets look to follow up on the launch and for more information on the company.
Businesses having gone through the IPO process will therefore enjoy more recognition to potential investors as well as new strategic partners.
The completion of the rigorous IPO process, coupled with people’s inclination to place more trust in public companies, can lead to increased credibility for a company and its products/services.
So having received a source of financing that is reliable, low-cost and long-term with a successful IPO on the CSX, a local company will be able to continue strengthening its potential and expanding its business operations.
And as it does so, it will continue creating career opportunities and jobs, improving livelihoods and reducing unemployment, which strengthens social stability and boosts national economic growth.
In this way, it can be said when companies utilise the Kingdom’s stock market – the CSX –to prosper and thrive, it in turn leads to a prosperous, thriving country.
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