JSE in high spir­its as it eyes Africa

CityPress - - Business - XOLANI MBAN­JWA xolani.mban­jwa@city­press.co.za

Since An­heuser-Busch In­Bev listed on the JSE last week, a pre­cur­sor to its pur­chase of SAB­Miller, the av­er­age daily trade of shares of the two com­pa­nies ac­counted for 10% of all listed com­pa­nies.

Donna Oosthuyse, JSE di­rec­tor of cap­i­tal mar­kets, told City Press that the AB In­Bev list­ing, and that of the Botswana-based Chop­pies fran­chise last year, is why the JSE is bol­ster­ing its so­journ in Africa to pro­mote cross-list­ing with cap­i­tal mar­kets in other African coun­tries.

The Ox­ford Busi­ness Group, which pub­lishes in­vest­ments and eco­nomic re­ports on 30 coun­tries, hailed the JSE for its im­proved regulation and su­per­vi­sion. It sug­gested that the JSE could list far more com­pa­nies from out­side South Africa be­cause mar­ket play­ers were keen to cap­i­talise on the JSE’s suc­cess, and es­tab­lish South Africa as the cen­tre for list­ing and de­riv­a­tives trade for the re­gion.

Oosthuyse said the strat­egy was to en­sure that any list­ing ben­e­fits both the lo­cal mar­ket and the coun­try from which the list­ing em­anates.

Among the JSE’s ini­tia­tives to sup­port the de­vel­op­ment of cap­i­tal mar­kets in Africa is the re­cent sign­ing of var­i­ous mem­o­ran­dums of un­der­stand­ing with other stock mar­kets.

“We’re the largest ex­change by far, but we be­lieve there’s a lot of work we can do to at­tract busi­ness from the rest of Africa, and busi­ness that has a win-win el­e­ment to it. We’re also look­ing at sec­ondary list­ings for com­pa­nies that are listed on other African mar­kets,” said Oosthuyse.

The JSE is look­ing for more lo­cal and in­ter­na­tional com­pa­nies to repli­cate the suc­cess of the AB In­Bev and Chop­pies list­ings. While delist­ings have not out­stripped list­ings, the JSE only man­aged to list more than 20 com­pa­nies a year for the first time in 2014 since the 2008 eco­nomic melt­down.

“We had a great ex­am­ple of that last year, when Chop­pies came and listed on the JSE. To me, that was a fan­tas­tic ex­am­ple of the po­ten­tial of African cap­i­tal mar­kets in­te­gra­tion. Here’s a com­pany that has its pri­mary list­ing on the Botswana Stock Ex­change. It came to South Africa and raised a sig­nif­i­cant amount of cap­i­tal, listed on our main board and now its ex­pand­ing in South Africa. That was the pri­mary rea­son for the list­ing: to fund its ex­pan­sion into east Africa,” said Oosthuyse.

“It also shows the at­trac­tion of the South African mar­ket for com­pa­nies in other parts of Africa be­cause we’ve be­come ac­cus­tomed to see­ing South African com­pa­nies go into the rest of Africa, like Sho­prite and MTN, but we’re not that ac­cus­tomed to other African com­pa­nies com­ing to our mar­ket to raise cap­i­tal. Chop­pies is such a good ex­am­ple of the African in­te­gra­tion story – show­ing how you can be from Botswana, list in South Africa, and in­vest those funds in Kenya and other coun­tries,” she said.

The Ox­ford Busi­ness Group re­port said the JSE should use its num­ber one rank­ing in the world for the abil­ity to raise equity cap­i­tal in the lo­cal mar­ket to make it the cen­tre of African trad­ing.

“As the sound­est and safest mar­ket in Africa, the JSE stands to ben­e­fit as is­suers seek list­ings, cor­po­ra­tions look for hedg­ing so­lu­tions and in­vestors seek op­por­tu­ni­ties. The mar­ket will con­tinue to be buf­feted by in­ter­na­tional fac­tors and a weak global econ­omy, but it should do well over time as its fun­da­men­tal strengths al­low it to op­er­ate well, re­gard­less of the en­vi­ron­ment,” said the group.

But Oosthuyse was also aware that grow­ing the JSE’s busi­ness and at­tract­ing global clients would be dif­fi­cult, par­tic­u­larly at a time when mar­kets are volatile.

“Not­with­stand­ing the tur­bu­lence that we’ve seen, we started the year with some very good news with the list­ing of AB In­Bev that added R3.1 tril­lion to the mar­ket cap­i­tal­i­sa­tion of the JSE, and it’s now the largest listed com­pany in our mar­ket. It is one of the five largest con­sumer goods com­pa­nies in the world and it’s the largest brew­ery in the world,” said Oosthuyse, who is not con­cerned about the num­ber of com­pa­nies that are delist­ing.

“We’re still net pos­i­tive. We’ve had more list­ings than delist­ings. One of the rea­sons we have delist­ings is if a com­pany is ac­quired by an­other one, so it’s not al­ways bad news when there’s a delist­ing,” said Oosthuyse.

To en­able the JSE to at­tract more com­pa­nies, it has in­tro­duced a con­cept of real es­tate in­vest­ment trusts, which ac­counted for the largest num­ber of list­ings in 2014 and last year.

It has in­tro­duced an­other con­cept called spe­cial-pur­pose ac­qui­si­tion com­pa­nies, where in­vestors can raise cash, list the com­pany on the ex­change and then have two years to look for a com­pany to ac­quire.

Donna Oosthuyse

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