TechFinancials applies to list on NEX. What for?
The company sees its plan to dual list its shares on the NEX as being entirely complimentary to its AIM listing.
In a financial world where cross-listings bring a handful benefits and loads of extra costs, TechFinancials Inc (LON:TECH) which until recently grappled with the issue of how to dispose of its Cypriot binary options business, has decided to stick to trivial wisdom and apply for admission to the NEX Exchange Growth Market.
The relevant announcement was released earlier today. The company says it has applied for admission of its entire issued share capital of 84,980,979 fully paid ordinary shares of USD0.0005 to trading on the NEX Exchange Growth Market (“NEX”), with the admission set to to take place on or around August 8, 2018.
TechFinancials sees its plan to dual list its shares on the NEX as being entirely complimentary to its AIM listing, and the company plans to remain trading on AIM following its admission to NEX.
Next up comes the most important part: the explanation of the rationale for such a dual listing. Unfortunately, all TradeFinancials does is appeal to outdated conventional phrases when it comes to dual listing.
“The Directors believe that a dual listing on NEX will increase the visibility of the Company in the market; may potentially enhance liquidity for the Company’s shares; and create a solid platform on which the Directors can continue to promote the Company’s growth”.
However, none of this seems to be compelling.
- First off, analysts tend to provide coverage (and thus increase visibility) of larger companies, regardless of whether they are dual listed or not. Plus, the difference in coverage is pretty small if a company is cross listed as compared to if it is not.
- Second – the trading volumes of cross-listed shares typically account for a very small percentage (not more than 5%) of trading volumes of a company’s shares. Hence, the argument about enhanced liquidity is not valid.
- Furthermore, the promotion may happen in terms of press releases but these will barely help if the company does not demonstrate actual growth and return on invested capital (ROIC).
- In addition, dual-listed companies face higher costs – exchange fees, for example, and much higher compliance costs.
- Finally, let’s not forget that investors tend to invest in shares they find attractive – and the dual listing itself can hardly be called a factor in that decision-making process.