In line with earlier reports, TechFinancials Inc (LON:TECH) has just provided an update on its plan to list its shares on NEX. The company today said that trading of its of 84,980,979 fully paid ordinary shares of USD0.0005 (“Ordinary Shares”) has commenced on the NEX Growth Market on August 8, 2018.
The company reiterated its earlier statement that the listing of its Ordinary Shares on NEX is entirely complementary to its AIM listing and it plans to remain trading on AIM following Admission.
When TechFinancials first announced its intentions for the dual listing, the company said:
“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, this rationale may be challenged.
- 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).
- Also, dual-listed companies face higher costs – exchange fees, for example, and much higher compliance costs.
- Finally, 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.
Until recently, TechFinancials had struggled to dispose of its binary options business, as regulators toughened their stance towards this market segment.
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