EVEN as registered companies in the manufacturing sector that are always in want of huge funds for expansion and diversification are not falling over each other to be the first to mobilise capital from the stock market, the service providers have little reason to tap the capital markets.

Hundreds of companies from all sectors continue to be registered with the chief regulator, Securities and Exchange Commission of Pakistan, every month, taking the number of registered companies close to 80,000. By contrast, only six companies came up for listing last year, raising the total number of stock market quoted companies at just 559.

The listed companies are divided in 35 sectors on the Pakistan Stock Exchange (PSX). There is none dedicated to the services sector, much less the educational institutions.

“There are no institutions imparting education that has ever knocked at the doors of the stock exchange for funds,” concedes a senior stock broker. He said there may be host of reasons for such institutions to avoid going public. But the stock exchange’s ‘listing regulations’ itself preclude listing of most schools, colleges, universities and institutions of higher learning, which among others require minimum paid-up capital for listing at Rs200 million.

Like the private companies in other sectors, privately sponsored entities on the educations sector value their privacy, which is why ownership and funding for most educational institutions is totally in private hands.

A principal of a school system that started with a Montessori/nursery in a rickety building in Garden area of Karachi has multiplied into three schools with impressive premises in fewer than four years. But that scarcely makes the principal-cum-owner happy. He broods over low student fees, high teachers’ salaries, government taxes, interest on bank loans and overhead expenses. It doesn’t require a lie-detector to assess the man’s statement, though many believe that high-profit-earning education institutions are high-prestige and deliver quality education, which makes their earnings less immoral than the trader or goods manufacturer who misdeclares earnings or siphons off funds from the industries he runs.

Even on the New York Stock Exchange (NYSE) very few educational institutions can be spotted. New Oriental was the first Chinese educational institution to enter the NYSE in 2006. More football clubs — such as FC Barcelona, Real Madrid, Manchester United — have made it to the Wall Street than educational institutions that are in for-profit business.

Finally, if some of the school systems that rake in profit seek listing at the PSX, would investors show enthusiasm in subscribing to their stock? A big broker pondered for a while: “I don’t think so,” he said and one reason he cited was the pre-determined range of profit that such institutions would earn year after year, unlike manufacturing and industrial units where earnings could multiply in a good year, enabling distribution of healthy dividends to the shareholders besides huge leap in their stock prices which yield exceptionally high capital gains.

Published in Dawn, April 3rd, 2016