Proposed listing plans crash
After initially approving the controversial listing of Sagarmatha Technologies – a collection of small e-commerce companies huddled with 55% of Independent Media – the JSE has rescinded its approval.
The JSE says this is because Sagarmatha hadn’t submitted its annual financial statements to the Companies and Intellectual Property Commission (CIPC) when the JSE approved the pre-listing statement.
It was in contravention of the Companies Act and JSE Listings Requirements, which the JSE was then unaware of.
The JSE said Sagarmatha hadn’t released its results for the 12 months ended December 31, 2017 by April 9, as required.
As a result, the JSE decided that the listing couldn’t proceed on April 13 as planned.
However Sagarmatha states it was compliant with the CIPC by April 11, and lodged its financials by then. Its financial statements, which were included in the pre-listing statement (thus publicly available), were released on April 10.
This follows a week of intense media debate about the proposed listing. The company presented itself as a media and technology giant-in-the-making, not unlike a miniature Naspers, Facebook or Amazon. Aside from loss-making Independent Media, its assets include e-commerce company Loot.com; African News Agency; Video360, and other small businesses.
It intended on raising R7.5 billion, based on a share price of R39, valuing the company at an incredible R50 billion – more than Datatec, EOH and AdaptIT together.
This fantastic valuation inspired the term “African Unicorn” in reference to Sagarmatha. “Unicorns” refer to US tech start-ups valued at over $1 billion.
First to raise the alarm was Business Day’s Ann Crotty, noting the rush to raise capital via a listing could have something to do with Independent Media, which makes up the bulk of the new company, being heavily loss-making, with debt repayments coming due.
This was followed by investigative journalist Sam Sole’s damning analysis of the proposed listing, a take on the proposed listing’s absurdity by Daily Maverick’s Ivo Vegter and a strongly-worded opinion from Business Day questioning the JSE’s responsibility in ensuring investors aren’t taken for a ride by listing companies.
It seems workers’ funds would have made up the bulk of the R3 billion to be raised ahead of the listing. The SA Clothing and Textile Workers Union planned to take up shares, while the Black Business Council’s investment company BBC Capital agreed to buy six million shares valued at R240 million, among others.
This is in addition to the Government Employees Pension Fund, which funded 80% of the original acquisition of Independent Media from the Independent Group in 2013.
Where to from here for Independent Media and Sagarmatha Technologies remains to be seen.
The SA Clothing and Textile Workers Union planned to take up shares, while the Black Business Council’s investment company BBC Capital agreed to buy six million shares valued at R240 million.