Chapter 5: How could you finance your company with the Mexican Stock Exchange?
By: Ximena Peinado
In the last chapter, we talked about the necessary steps that must be taken to be able to list your company on the stock market. Once you have met all the requirements, it is time for you to think about what kind of instruments available are adapted to the finance needs of your company.
Next, we present the four instruments of the Mexican Stock Market that you can use. Any of these is effective, the only thing that changes is the objective of where the money that you collect with your shares or, better said, your public offering that you will put on the stock market.
Short Term Debt
They are useful to cover the needs of working capital.
Long Term Debt
The Long-Term Debt is designed to cover the financing needs for infrastructure, expansion, refinancing of liabilities and other corporate purposes. For this, it is necessary to carry out a securitization of assets, which, through a trust, allocate assets or flows of future cash to obtain financing to give liquidity to non liquid assets.
Capital finance through the issuance and public offering of shares is the most competitive formula for obtaining long-term resources for the company. When the company wants to gather resources without increasing its liabilities and obtain fresh capital, the best alternative for it is the issuance of shares, which will increase its Social Capital based on its growth and expansion strategies. The return for the investor in this case is presented in two ways: in the dividends generated by the company and the capital gain.
Real Estate Investment Trusts
REIT are vehicles destined to the finance for the acquisition or construction of real estate that has as its purpose the lease or the acquisition of the right to receive the income from the lease of said goods. By law, the Trusts distribute 95% of the profits from the rents among the investors holding the Real Estate Investment Trusts.
Development Capital Market
The “CKD’es” are securities that will issue trusts, which will support the channeling of investment resources to growing sectors and activities and will provide flexibility and new alternatives for portfolio diversification to Institutional and Qualified Investors in our country.
They are defined as titles or fiduciary securities destined for the finance of one or more projects, or for the acquisition of one or more companies. Their performance is tied to the underlying assets or assets in trust. These are designed to drive infrastructure, real estate, private equity and technology development projects.
The process is long, but it has its advantages. Throughout history, there have been several success stories in companies that multiplied their value by listing. One of the biggest examples is s Apple, Microsoft, Yahoo, Amazon y Google. In the case of the Mexican Stock Exchange, one of its success stories is José Cuervo.
Keep learning from PR1ME Capital
Listing on the stock exchange can be in many ways, and for this reason in the next chapter we will explain them to you so that you as an entrepreneur determine what is best for your company .
In the next chapter, we will investigate the legal framework of the stock market, so that you master your rights and your obligations as an investor.
Continue reading our new series on financial exchanges so you can learn from PR1ME Capital .