EXCLUSIVE: PIC takes 25% stake in ZAR X
The young stock exchange is talking to its new shareholder about listing some of its considerable private equity assets
The Public Investment Corporation (PIC), one of Africa’s largest asset managers, has bought a 25% stake in ZAR X for an undisclosed amount.
The equity injection would bolster ZAR X’s balance sheet and listings pipeline and enable it to better drive financial
inclusion, CEO Etienne Nel said on Thursday.
"We were looking to bolster our BEE [black economic empowerment] credentials and went through an extensive process last year, talking to various strategic BEE partners. The additional benefits that the PIC brought to the table won the day," he said.
ZAR X now had a 36% black shareholding.
The exchange was already in discussions with the PIC around listing some of its considerable private equity assets, Nel said.
ZAR X was the first of four new stock exchanges to be launched in SA over the past 12 months, in what is the first challenge in decades to the JSE’s dominance. Its February debut was followed by the take-offs of 4 Africa Exchange, A2X Markets and Equity Express Securities Exchange.
The PIC’s investment in ZAR X is a strong vote of confidence in the exchange and augurs well for its rivals
While few dispute that the new exchanges will promote competition and financial inclusion, they have got off to a slow start, primarily listing stocks that had traded over the counter before or in which trade was restricted. Only A2X, which provides a secondary listing platform for JSE-listed heavyweights, has managed to list large companies such as Coronation and Afrimat. In 2017, Patrice Motsepe’s African Rainbow Capital Investments bought a 25% stake in A2X.
The PIC’s investment in ZAR X is a strong vote of confidence in the exchange and augurs well for its rivals. It gave the PIC, which manages more than R1.9-trillion in assets, "an alternative platform from which to trade and on which to list", said corporate affairs head Deon Botha. It had chosen ZAR X over other new exchanges based on "the opportunity presented".
"This transaction will assist us in our resolve to bring about meaningful change in and transformation of the domestic
capital markets and overall financial services industry landscape in SA."
The PIC holds a 9.86% stake in JSE Ltd on behalf of the Government Employees Pension Fund, Bloomberg data shows.
January had been ZAR X’s biggest in terms of trading values since its launch almost a year ago, said Nel. It had now signed up 10 stockbrokers, including one of SA’s largest prime brokers, Peregrine Securities. This would boost trading on the exchange, which had a market value of about R3.7bn.
The listings pipeline was also looking healthier, as the malaise that gripped the market in 2017 began to lift after the ANC elective conference.
"Since the beginning of last week we’ve had inquiries for five new listings. The discourse with issuers is significantly more positive."
Malcolm Segal, cofounder of Venture Capital Management Services, said that he had met with the JSE and alternative exchanges to discuss listing 12J venture capital companies.