Tuesday, January 19, 2021

Wilderness migrates to JSE main board as Africa Board fails

Wilderness, the Botswana domiciled tourism outfit, will next month migrate to JSE main board following a move by South Africa’s bourse to dismantle the failed Africa board.

The conservation group with large presence in the country has a primary listing on the Botswana Stock Exchange (BSE) and will maintain its secondary listing on the JSE after the discontinuation of the Africa board.

“As communicated by the JSE, this move is part of its strategy to enhance their Africa offering. African companies will be allowed to list directly on the Main Board and AltX,” Wilderness said as quoted by Fin 24.

The move comes as the South African bourse change in strategy to include companies listed directly on the Main Board and AltX as well as offering depository receipts and a broader range of exchange traded funds and debt instruments.

“As a result, the JSE will move the companies listed on its Africa Board directly to the JSE’s Main Board. Smaller and medium-sized companies in the rest of Africa fulfilling the criteria of AltX will from now on be encouraged to list; previously the Africa Board only catered for Main Board listings,” the JSE said in a statement.

Analysts believe Africa Board is a failure because since its inception, it only managed to attract two companies; namely Wilderness Safaris and Trustco of Namibia.

It failed to attract large companies from the continent partly because of high costs of maintaining a listing on the JSE.

However, the JSE said there are several reasons why it feels now is an appropriate time for this strategic shift.

It cited the announcement last year by National Treasury that companies previously viewed as foreign listings would in future be treated as domestic makes it easier for South Africans to invest in JSE-listed African stocks.

On the other hand, JSE has developed good relations with several stock exchanges on the continent while it said investment flows into the continent’s markets and the number of funds focused on the region are increasing as investors search for high returns in previously unexplored emerging markets.

“The JSE’s existing African offering includes 12 African companies,” says Siobhan Cleary, Director of Strategy and Public Policy at the JSE. “In future, there will be no differentiation (for listing purposes) between African and non-African companies. For equities, this will mean that we will list the companies on the Main Board or AltX as applicable. We will also actively market and profile the African companies that are already listed.”

“All of this means that there is an opportunity for the JSE to work with these exchanges and various development institutions to build capacity on the continent. It also gives the JSE the opportunity to evolve its Africa strategy. This has meant looking critically at what issuers ÔÇô companies, governments and others ÔÇô from the rest of the continent are looking for, and aligning their needs with the JSE’s objectives,” said Cleary.

The JSE also said it has found out that companies wanted to be ranked with their sector peers.
But, the Africa Board did not enable companies to be listed in their industry sectors and the exchange’s finding is that this hampered enthusiasm of some prospective issuers.

It also said another factor previously curbing appetite for Africa Board listings was a misperception that the Africa Board was less visible than a Main Board listing, even though the Africa Board was in fact part of the Main Board.

“This evolution in JSE’s strategy is a step in the right direction in the quest to increase capital flows into the rest of Africa,” added Nathan Mintah, Chairman of the JSE’s Africa Advisory Committee.

“Offering issuers and investors the ‘whole JSE’ market platform for access to instruments across the capital structure in equities, mezzanine, and fixed income combined with the JSE’s liquidity will clearly benefit all stakeholders and serve as a catalyst for product innovation in areas such as exchange traded products for the rest of Africa.”


Read this week's paper