The PSX GEM Board, the Growth Enterprise Market Board of the Pakistan Stock Exchange (PSX), serves as a specialized platform for emerging and high-growth businesses to access public capital. This dedicated market aims to facilitate the funding needs of small, medium, and greenfield enterprises as they pursue expansion and development.
Key distinctions and characteristics of the GEM Board, particularly for investors, include:
Targeted Issuers: Unlike the PSX Main Board which hosts well-established companies with extensive operational histories, the GEM Board is specifically designed for high-growth startups and Small and Medium Enterprises (SMEs) that may not yet meet the stringent profitability or operational track record criteria typically required for a main board listing.
Flexible Listing Framework: The GEM Board offers more accommodating listing requirements, including lower initial fees and reduced minimum post-issuance paid-up capital, reflecting the nascent stage of these growth-oriented companies. This streamlined process also bypasses the requirement for Securities and Exchange Commission of Pakistan (SECP) approval on the Information Memorandum, contributing to a swifter listing.
Capital Accessibility: It provides a crucial avenue for these enterprises to raise public capital, diversifying their funding sources beyond traditional private equity or angel investment.
Enhanced Visibility and Trust for Issuers: Listing on the GEM Board can significantly elevate a company's public profile, build market credibility, and attract further investment, partnerships, and clients.
Exit Strategy for Early Investors: For early-stage investors in startups and growth companies, the GEM Board offers a potential liquidity event and an exit mechanism for their investments.
Mandatory Advisory Support: Companies seeking a GEM Board listing are typically required to engage an advisor (such as a licensed Consultant-To-the-Issue, scheduled banks, brokerage houses, accounting firms, or audit firms) to guide them through the listing process, ensuring adherence to regulatory frameworks.
Pathway to Main Board: Companies that successfully mature on the GEM Board have the opportunity to transition and list on the PSX Main Board once they fulfill the established criteria, offering a growth trajectory within the exchange.
Who Can Invest on the PSX GEM Board?
A fundamental distinction of the GEM Board, and a critical point for potential investors, is that trading is primarily restricted to "accredited investors." This differs significantly from the PSX Main Board, which is open to general public investment.
The categories of accredited investors typically include:
Institutional Investors: This broad category encompasses entities such as:
Financial Institutions
Companies (as defined in the Companies Act)
Insurance Companies
Trusts
Securities Brokers
Funds
Foreign Investors
Any other entity specifically designated by the Commission.
Accredited Individual Investors: For an individual to qualify, they must meet specific financial criteria. As per the latest definitions, these are individuals registered with the National Clearing Company of Pakistan Limited (NCCPL) who possess total assets of at least PKR 5 million. Importantly, this includes not only the value of securities held in their CDC investor accounts but also real estate properties, vehicles, and other assets. Individual investors are generally required to self-declare their eligibility to their securities brokers, affirming their financial standing and understanding of the associated risks.
Why the Restriction?
The limitation to accredited investors is a deliberate regulatory measure due to the inherently higher risks associated with investing in smaller, growth-stage companies. These companies may have less established financials, limited operating histories, and potentially lower liquidity compared to those on the Main Board. The restriction aims to ensure that only investors with a greater capacity to understand and absorb these heightened risks participate in the GEM Board.
Which Companies are listed on the PSX GEM Board?
Companies listed on the Pakistan Stock Exchange's (PSX) GEM Board are:
Symbol | Company Name |
Supernet Limited | |
Burj Clean Energy Modaraba | |
Blue-Ex Limited | |
Nets International Communication Limited |