A2X lands sixth listing as Huge seeks more liquidity
It may be a market minnow, but JSE rival A2X has netted telecommunications group Huge as it strives to build up its secondary listings offering.
A2X began trading in October 2017 and it has been a slow grind for the company with Huge now just its sixth listed offering. The others are black economic empowerment investment holding group African Rainbow Capital, construction materials business Afrimat and financial services companies Coronation, Peregrine and Sandown Capital.
But CEO Kevin Brady says the pipeline is looking "healthy" and A2X is on the cusp of signing on a top 40 stock.
Huge itself has somewhat sunk from public view, partly owing to a single stock futures debacle in which the directors were fined and then forced by the JSE to restate its financial statements in 2010, 2011 and 2012 owing to its accounting treatment of 80,455 single stock futures contracts that it took out in 2008.
But CEO James Herbst says that Huge had gone through "the valley of the shadow of death" after the implosion of the least-cost routing market.
The business, says Herbst, "is a perfect substitute for Telkom’s copper cable" so instead of using copper for the so-called last mile in telephony, the company uses GSM technology for those who would like a fixed line installed but do not want to go through Telkom. Herbst says that the listing on A2X "will bring market efficiencies which our shareholders do not enjoy currently. We expect the double, being the bid offer spread, on our shares to narrow."
He says that trading on A2X should help lower transaction costs for the group’s investors.
The telecom group has a market cap of R1.5bn and annual turnover of R246m as of its 2017 financial year-end.
Herbst says the decision to pick a secondary listing had nothing to do with any bad blood between the company and the JSE and was based on the "reasonable prospect" that liquidity providers like A2X may bring "increased liquidity and market making to the Huge share".