Reforms to encourage more capital raising

PNG’s capital markets are being transformed. The foundations have been laid for the country’s first corporate bond market, while expected reforms will introduce several new classes of investment. Part of Asian Development Banksupported market reforms, PNG’s Capital Markets Modernisation Act 2023, once implemented, will pave the way for the establishment of new investment options in PNG, such as a small offers market, unit trusts, peer-to-peer lending and equity crowdfunding.

It also aims to strengthen governance at regulator the Securities Commission of PNG (SCPNG) and at PNGX, PNG’s stock exchange.

The reforms follow the SCPNG’s landmark approval in 2022 of new rules to allow companies to issue corporate bonds and list them on PNGX.

‘It is part of our ongoing commitment to develop the PNGX capital markets, provide companies with new ways of raising funding and provide investors with new investment opportunities,’ says PNGX Chairman David Lawrence, who tells Business Advantage PNG the new bond market will initially be limited to institutional investors.

New listings?

Australia’s Santos was the last new listing on PNGX, at the end of 2021. While Lars Mortensen,

Managing Director of stockbroker JMP Securities, doesn’t expect any new Initial Public Offerings (IPOs) short term, he expects a significant portfolio of real estate assets to be amongst the next wave of listings. Meanwhile, local lender Heduru Moni Ltd has made no secret of its desire to list.

With several larger privatelyowned PNG companies approaching generational change at the top, David Lawrence also expects some of these to look for an IPO exit. He also hopes to see greater activity between PNGX and Kumul Consolidated Holdings – the manager of PNG’s state-owned enterprises (SOEs) – following the latter receiving a capital market licence.

‘The opportunity for privatisation of SOEs and development of its commercial assets is quite substantial,’ he says.