Prospects : an evaluation of the first dedicated SME-oriented capital market structure in Malta : a case study

Abstract

This study investigates the creation of Prospects, hereby generating increased awareness regarding this capital market product, with the aim of observing an increase in the companies that are admitted to Prospects. The need for creation of such SME-oriented capital market became evident upon realizing that SMEs are the foundational element of any economy, and that such SMEs encounter difficulties when trying to obtain funding. The objective of this study was to assess operational process of Prospects, including the process whereby companies are admitted in this market, including a comparison to alternative financing structures for SMEs. This objective was achieved using an academic research approach. Furthermore, primary research was conducted in the form of questionnaires to local SMEs, and interviews to industry professionals. The aim of this study’s primary research was to obtain a better understanding of the local SMEs' attitudes towards various sources of capital, with primary emphasis on Prospects, from the point of view of both SMEs, and industry professionals. This study also determined issues pertaining to Prospects, that need to be addressed, together with possible solutions for these issues, in hope of ameliorating Prospects by making it more accessible to SMEs. This study will intentionally forego both investors’ point of view, and the general public’s point of view regarding Prospects, due to being a relatively new alternative financing method, and it may be the case that not enough awareness is yet generated. This research also explored more ways in which Prospects may be ameliorated, such as by concluding that a period of orientation for SMEs is expected to generate higher interest in Prospects, due to making the transition from a ‘family-based’ modus operandi, to a standardized corporate governance approach.