NOT THE FOG­GI­EST

Finweek English Edition - - INVESTMENT -

Re­cently Sappi delisted its Amer­i­can de­posi­tary re­ceipts (ADRs) from the New York Stock Ex­change and it now just trades over the counter in the US. ADRs are a way for South African com­pa­nies to give their shares ex­po­sure to the US mar­ket with­out a for­mal list­ing. Now we have Cash­build and Growth­point both is­su­ing ADRs (and in both cases over the counter rather than on the NYSE). For Growth­point it does make sense as it en­ables US in­vestors to get into South Africa’s largest prop­erty com­pany and, as it re­cently con­verted to a REIT, it has even more at­trac­tion. Why Cash­build is go­ing the ADR route I can’t fathom, are US in­vestors keen for ex­po­sure to our strug­gling lo­cal build­ing ma­te­ri­als mar­ket? Surely not.

Sappi la­tor (NCR) case. Ini­tially pro­posed at a cou­ple hun­dred mil­lion, the set­tle­ment came in at very mod­est R20m and the stock re­sponded pos­i­tively, al­beit most of the pos­i­tive re­sponse was on the day be­fore the of­fi­cial an­nounce­ment! The two re­main­ing is­sues need­ing clar­ity from African Bank are the price of the rights is­sue and the dis­posal of El­ler­ines. Th­ese two don’t solve the bank’s big­ger prob­lems, but it will re­move the un­cer­tainty around th­ese is­sues from the mar­ket, which can then fo­cus on their prof­its and the qual­ity of the prof­its.

African Bank In­vest­ments

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