Enabling Jordanian IT companies to benefit from the huge capital market opportunity through facilitating Initial Public Offerings (IPOs) on the Amman Stock Exchange, was the main theme highlighted at a technical strategy workshop held on Monday.
Sponsored by Jordan’s Information Technology Association (Int@j) and the information technology sector in Jordan, the workshop is the fourth in a series of 12 technical workshops that come on the heels of REACH 2.0, a review process of the REACH government initiative that was launched early July.
With the process of shifting from command to free-market economy, Jordan's regulatory and legal system needs to be aligned to induce a pro-business environment. “Since the economic reform process in Jordan started, the IT sector has been rightfully identified as Jordan's Trojan horse. In a service-based industry such as IT that usually starts generating real profit on the long term, providing capital to sustain it through its first fledgling years is essential for its professional growth,” stressed Russel Diehl, an AMIR Programme consultant and facilitator of the workshop.
The workshop highlighted Initial Public Offerings (IPOs) as an international mechanism that is instrumental in attracting local and foreign investment. It also offered a review of IPOs standards in countries of leading IT firms as opposed to Jordanian standards.
Citing an example of areas that need aligning in the current Jordanian IPOs law, Diehl pointed out that any company wishing to make an Initial Public Offering on the Amman Stock Exchange is required to present a past record of at least three years of profit. This, he went on to say, presents an obstacle to new IT companies that have not started making profit, yet seek growth through selling shares for investors.
Another major issue discussed in the workshop was software company valuation, which is needed to ensure the correct value for a company raising capital in an equity share situation.
In remarks calling for establishing the legal and regulatory environment that would facilitate IT firm IPOs on the Amman Stock Exchange, Leader of the REACH 2.0 Capital and Finance Committee, Ahmad Tantash, said “We are tasked with the responsibility of helping to create a prosperous and competitive IT industry. This requires creating a sound market mechanism that enhances the liquidity of IT securities, an essential element to increase local and attract foreign interests in the Jordanian IT sector.”
Reiterating the urgency of the situation, co-leader Laith Al Qasim, called for initiating the necessary actions to align the pertinent regulatory system in the short term to be concluded within three years.
At the conclusion of the workshop Diehl called on the Amman Stock Exchange, Jordan Securities Commission, Securities Depository Center and Jordan's IT industry to work together to hammer out the particulars of a new Jordanian IPOs law. ― (Jordan Times )
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