9/11/2018: THE CLOSING DATE FOR SUBMISSION OF PROPOSALS IS EXTENDED UNTIL 27 NOVEMBER 2018
Single Stage Open Competitive Selection
The technical cooperation project is taking place within the EBRD Initiative on Local Currency and Capital Markets Development (LC2). This Bank-wide strategic Initiative aims to identify and support sequenced reforms and policies in EBRD’s countries of operations (COOs) that contribute to local currency and local capital market development. One of the ways that the Bank supports this role is in producing focused studies and providing assistance to developing the local capital markets based on international standards and best practices. One of the focus areas of LC2 is increasing the access to capital market financing for small and medium sized companies (SMEs).
SMEs are the driving force behind economic growth, employment, poverty alleviation and wealth creation. But, SMEs face more severe credit conditions than larger companies, which include higher interest rates, shorter maturities and increased collateral. Access to capital market financing is limited, as exchanges are still focusing their business development efforts on mid- to large-cap companies and examining the options for increasing the number of transactions in order to secure revenues.
Some of the stock exchanges (SEs) in EBRD’s countries of operations (COOs) have established SME segments, though they are still at an early development stage compared to the share of SMEs in those markets.
Within this context, the Egyptian Exchange (EGX) had discussions with EBRD to restructure the EGX SME platform "NILEX". The platform was launched in 2007 as the first market for SMEs in the region, with new listing rules that focus on a cost-effective regulatory regime adapted to the needs and characteristics of SMEs. The new market aimed to support growing medium and small enterprises and help them grow their businesses, increase their competitiveness and raise their contribution to economic growth.
However, after 11 years of operations, only 32 companies are listed on the SME platform. The platform has, to date, a total market capitalization of USD 60 million and an average daily trading volume of USD 160,000, with almost no institutional or foreign investments. Moreover, all capital increases undertaken by NILEX-listed companies did not exceed USD 15 million. EGX has recognized the need to address the rising challenges that hindered the desired growth of the SME platform.
Within this context the Egyptian Exchange (EGX) has requested technical assistance to support the restructuring of the SMEs platform to ensure that it is poised to provide the conducive environment for SMEs to develop and access equity market finance and help maximize their contribution to the local economy. EBRD now intends to engage a consulting firm to propose a detailed restructuring plan for the EGX SME platform.
EBRD intends to select and contract a consulting company (the Consultant) to the Assignment.
The expected outcome of the Assignment is (a) conduct a comparative review of the SME platform b) define the optimal set-up of the restructured SME platform based on international experiences and prepare an implementation roadmap.
The selected Consultant is expected to provide the following services:
- Activity 1: Conduct a comparative review of the SME platform
- Activity 2: Define the optimal set-up of the restructured SME platform
It is expected that the Consultant bases the recommendations on international standards and best practices as well as lessons learned from SME financing platforms from other comparable countries, taking into account relevant international or local regulations such as the Markets in Financial Instruments Directive and Regulation (MiFID2/MiFIR) in the EU and Jumpstart Our Business Startups Act (JOBS Act 2012 and the currently discussed JOBS and Investor Confidence Act 3.0 ) in the US which enabled the creation of SME markets.
The Consultant will be tasked to liaise with all concerned key stakeholders locally to ensure a broad level of acceptance of the proposed set-up. It is foreseen that the Consultant organizes three workshops, one for the Financial Regulatory Authority (FRA), the Ministry of Investment and one for key stakeholders, to test and discuss the proposed new setup and market model. Furthermore, the Consultant is expected to organise a roundtable discussion with selected SME platform listed companies and with prospective SME listing candidates to collect their views on challenges and opportunities that could be seized through restructuring the SME platform.
Full Terms of Reference (TOR) of the Assignment can be found here.
Consultant Selection Procedure: Single stage open competitive selection. Interested firms or groups of firms are invited to submit a Technical and Financial Proposal.
Assignment Start Date and Duration: The Assignment is expected to start in December 2018 and has an estimated overall duration of 6 months.
Cost Estimate for the Assignment: EUR 180,000 (exclusive of VAT).
Funding Source: It is anticipated that the contract will be financed by EBRD’s Shareholder Special Fund. Selection and contracting are subject to the availability of funding.
Eligibility: There are no eligibility restrictions based on the consultant's country of origin.
Consultant Profile: Corporate services are required. The Consultant will be a firm or a group of firms preferably with previous project experience related to capital markets development. The Consultant must have a proven track record of working with market operators, authorities and participants on similar consulting assignments. The selected Consultant will be expected to utilize its financial industry and market infrastructure contacts for the benchmarking exercise which is a part of the project. In-depth knowledge of market design especially for SME markets/MTFs, liquidity provision systems and understanding of new regulatory and technological developments as proven in previous assignments is required. It is expected that the Consultant’s team of key experts will consist of:
(a) Team Leader / Capital Markets Expert
- 10 years or more of Consultancy experience related to capital markets development;
- 5 years or more of project management experience including acting as Team Leader on similar assignments;
- Excellent knowledge of international standards and regulation;
- Experience in the design, management and/or implementation of SME Growth Markets/Financing Platforms/MTFs;
- Acted as a team leader/capital markets expert in minimum 2 similar projects;
- Previous experience on exchange level is preferred;
- Excellent communication, analytical, report writing and presentation skills;
- Proficiency in written and spoken English language.
(b) Pool of Exchange and SME Market Platform Experts
- At least 5 years’ consultancy experience related to securities market development and the design/management of new market segments preferably for SMEs
- More than 3 years’ experience in trading, clearing and settlement;
- Excellent knowledge of international standards related to/impacting the implementation of SME financing platforms/SME growth Markets/MTFs;
- In-depth understanding of current trends and developments in increasing SMEs access to capital market financing;
- Knowledge of liquidity provision schemes (incl. market making) preferably for SME markets.