Taking a positive step
A2X listing welcomed but market still awaits more detail on how the tech giant plans to reduce its valuation discount
It’s not quite the big structural remedy that many investors are hoping for, but it’s still good news that
Naspers shares will find a second home on SA’S alternative stock exchange, A2X Markets, before the end of 2018. The internet behemoth said on Tuesday that its shares would start trading on A2X on December 27. The company will keep its primary listing on the JSE. Analysts (and Naspers) say this move will do little to drive down the group’s hefty valuation discount relative to Tencent.
But it could improve liquidity and, overall, it’s a win for SA’S capital markets.
A2X CEO Kevin Brady says his exchange has now reached “critical mass” as 15 companies, including some heavyweights, have listed.
Successfully courting Standard Bank and then Naspers — Africa’s largest public company, with a market capitalisation of R1.3-trillion — is a big deal for A2X.
For the time being, says Brady, foreign investors are still “more receptive” to secondary exchanges because they’re familiar with the concept.
Naspers CEO Bob van Dijk says A2X and other similar peers are using technology to reduce trading costs and lift market transparency. ★★★/5
“As one of the world’s leading technology investors we understand the value of technology and are pleased to support these efforts by also listing on A2X … we believe our shareholders will appreciate the added choice of trading venues,” Van Dijk says.
And there’s nothing to lose.
Naspers won’t have to fork out any cash for its secondary listing and there’s no additional regulatory compliance required.
However, the market is still waiting for more details about the larger “structural options” Naspers is working on to reduce its valuation discount.
Some have pressed the group to seek a secondary listing abroad, while others want it to unbundle its main asset, Tencent.
One structural measure in the pipeline is the unbundling of Multichoice Group, the pay-tv operator that funded Naspers’s Tencent investment and its newer e-commerce ventures. That should happen in the first half of 2019.
A Naspers spokesperson says the secondary listing on A2X is just another “shareholder-friendly step that we have taken which is likely to be viewed positively”.