Manning: Solis IPO offer hopefully a catalyst for other SMEs

MINISTER in the Ministry of Finance Brian Manning lauded Eric Solis Marketing Ltd (Solis) after it became the first company in over five years to launch an initial public offering (IPO) on the TT Stock Exchange (TTSE).

The TT Securities and Exchange Commission (TTSEC) approved Solis’s application as a reporting issuer, paving way for the Solis IPO inclusion on the TTSE on June 15, a year after it decided to go public.

“The launch of the IPO is a commendable achievement for Solis and a testament to their strategic vision and unwavering commitment to quality,” Manning said at the TT Chamber of Industry and Commerce, Westmoorings.

“In light of this, investors in this venture can anticipate steady dividends, further development of business operations at Solis and expansion through...new technologies.”

Solis, a family-run business over 50 years old that was acquired by the Office Authority in 2017, has signalled its intention to use capital raised to invest in stock for its machine-rental business and new lines of business.

It is seeking to raise $11 million from 2,750,000 shares at $4 per share.

“Raising this capital allows a pool of cash to be available to fund those rentals so that the business model of this is, therefore, highly predictable,” Rishi Baddaloo, Office Authority managing director, told Newsday.

The National Commercial Bank (NCB) is the underwriter and expressed confidence in Solis's past performances and growth prospects.

Solis specialises in sales and servicing of multi-function commercial copiers and printers and is a dealer for international brands, including Lexmark, HP and Brother. The company partnered with Korean technology giant Samsung late last year as a distributor for digital screens often used as menu boards and interactive displays.

Solis is only the third SME (small and medium-sized enterprise) to be listed on the TTSE after Cinema One in November, 2018 and Endeavour Holdings Ltd, listed in December, 2019.

Manning said the government has worked with several public and private enterprises to enhance the SME market, whose capitalisation value was approximately $600 million as of June 2024.

He said the government has recognised a need to bolster the market and has made tax incentives available to prospective companies, effective January 2022, from which Solis will benefit.

SMEs listed on the TTSE are given a “full tax holiday” and are exempt from corporation taxes, Green Fund and the business levy for the first five years. Additionally, the listed company will only pay 50 per cent of its taxes for the following five years.

“The government (recognises) the importance of SMEs because they drive innovation and form an integral part of the innovation ecosystem.”

Manning added that SMEs are more agile than larger enterprises, allowing them to respond quickly to market changes.

“SMEs also discover and open new markets through creativity and dynamism,” Manning said. “They are an important bridge between micro-enterprise and industrial-scale business. In short, SMEs are the engines of our economy.”

The Caricom Secretariat found that as of June 2022, SMEs contributed some 40 per cent of the region’s GDP.

Manning said, “To this extent, the revised Treaty of Chaguaramas which established (Caricom), including the Caricom Single Market and Economy, has been focusing (on establishing) an environment which supports the development and viability of SMEs.

Caricom data he highlighted revealed that micro, small and medium enterprises (MSME) accounted for 95 per cent of registered TT businesses in 2018, with “significant activity” in the services sector.

Manning also referred to the Central Bank research finding that MSMEs over the last ten years “may have ballooned with the presence of digital transformation.”

He said although there is growth within the MSME sector, the sector has inherently retained challenges, “a major hurdle being the financing gap which is the difference between the amount of funding an MSME requires to fulfil business objectives and the amount of the funding it can obtain from traditional sources of finance.”

Added to the incentives, Manning highlighted the SME mentorship programme launched in October 2023, in a joint initiative of the government, Central Bank and the TTSE.

The programme is designed to support SMEs by helping them to close identifiable gaps, such as insufficient documentation and compliance with corporate governance standards, to get approval for listing.

“This comprehensive programme offers an experienced and highly qualified cadre of industry professionals who would strategically develop the competencies of each SME by providing direct mentoring and contributing to the companies’ growth, innovation and overall strategy,” he said, adding that it demonstrates a willingness of the TTSE to invest the time and resources to help companies operate efficiently on the stock market.

An SME “marketplace” is available on the Ministry of Finance website, providing access to information on the SME market and the procedure for listing.

After the ministries’ initiatives were implemented, the TTSE and the TT Chamber of industry and Commerce signed a co-operative agreement in which both parties committed to facilitating capital-raising opportunities for SMEs to help them expand their businesses and to list on the TTSE SME Market.

Manning said, “It is anticipated that this collaboration will allow for greater access to the capital markets and simultaneously contribute to the economic wealth and development of our country.”

He added that the government has facilitated access to financing through the National Entrepreneurial Development Company (Nedco) as well as a partnership with commercial banks valued at $500 million.

The new Long-Term Loan Guarantee Scheme guarantees up to 80 per cent of the value of the loans for up to ten years, including a two-year moratorium on repayments for enterprises in the non-energy sector.

Manning said the Ministry of Trade and Industry also supports SMEs through various facilities, including the Grant Fund Facility administered by ExporTT.

The Gateway to Trade Programme, a joint venture with the TT Coalition of Services Industries, targets business and professional services in information and communication technology; energy services; and tourism.

The trade ministry’s Export Booster Initiative, in collaboration with the TT Manufacturers Association, he noted, aims to enhance market access for SMEs.

He revealed that $6 million had been paid to 65 SMEs in the non-energy sector between September 2023-March 2024.

“The grant distribution demonstrates the Government’s support and commitment to economic expansion and advances the country’s diversification agenda. The government understands the financing challenges of SMEs, and it is for this reason, we have introduced various incentives to support such businesses.

“Through these facilities, individuals and businesses can access funding to transform, reposition and expand their operations."

Manning said the ministry hopes the IPO will serve as a catalyst, encouraging other SMEs to view equity financing as a viable option to develop their businesses.