Sunday, April 18, 2021

New debate needed to convince SA companies to cross-list in Botswana

A veteran financial journalist who penned the Central African Stock Exchanges (CASE) Handbook has suggested a new debate that will convince South African companies operating in Botswana to have cross listing on the local bourse. The ex Financial Times scribe, Jonathan Waters of New Zanj, said entities tend to list when they want to raise cash, but many now do not need money and have no obligation to float shares.

“The debate needs to change; it has always been ‘come and list’ with no reasons to listing,” said Waters.

A couple of South African companies operating in Botswana are not listed on the Botswana Stock Exchange. These include Spar, Woolworths, Shoprite and Standard Bank (Stanbic) amongst others.
Strangely, many of them have cross listing in Namibia.

“But they do make considerable amounts of money in this market,” said
Waters.

He argued the BSE should make it easier for these companies to list since they have audited results and annual reports where they come from in South Africa, which are some of the listing requirements.
“That is what I think stock exchanges should do,” he said, adding that
listing in the domestic market would give employees of these entities
access to the company shares when they retire.

However, Deputy CEO of the BSE, Thapelo Tsheole, reiterated the government’s position that the stock market believes in a free market and therefore would not want to force companies to list. Journalists have in the past singled out Stanbic Botswana, a subsidiary of Standard Bank and questioned why it is not listed. But Tsheole came to their defence.

“Let us give them credit,” said Tsheole. “Stanbic has listed several bonds”.

In April the Ministry of Finance and Development Planning said there is currently no law that compels large corporations or companies to list on the Botswana Stock Exchange (BSE) when they reach a certain threshold in their balance sheets.

“My ministry has no intention of coming up with such a law in the
immediate future because Botswana is a free market economy where
companies should be free to set up. I am of the view that it is best
to let companies consider listing as a voluntary exercise based on the
company’s strategy,” said the Minister.

He was responding to queries from Tonota MP, Fidelis Molao on whether there is a law that compels big companies to list on the BSE when they reach a certain threshold on their balance sheets to accord Batswana the opportunity to buy shares. Normally companies list on a stock exchange in order to raise money and also empower citizens of a particular country.

Standard Bank Group joint chief executive, Ben Kruger said in the past
the group will float shares on the local exchange at the right time.
“Listing on the stock exchange is not always universally good. Of
course, we have done a lot of work in Botswana as would be shown by
latest data,” he said at the time.

“We are now among the top three banks in the country. But at the
moment we are of the view that our trading multiples are low. This is
not to say we have any anti-feelings of listing. We have listed in
many other countries. And we will do it in Botswana when we feel it’s
the right time to do it,” said Kruger.

“Stanbic does not need to list, but it needs to bring some of the shares
to Botswana or Malawi because it has employees here,” argued Waters.

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