Picture: ISTOCK
Picture: ISTOCK

SA’s 14th-largest company by market value will get its secondary listing on A2X Markets on Monday, which will be this bourse’s first large-cap listing.

The move will deliver a fivefold increase to A2X’s market capitalisation and make the challenger exchange a far bigger threat to the JSE.

Insurance group Sanlam would take a secondary listing on the exchange on Monday, A2X Markets said.

With a market value of R181.9bn, Sanlam was the country’s 14th-largest listed company on Thursday, behind Old Mutual and MTN, but ahead of Barclays Africa Group and Shoprite.

Sanlam’s secondary listing, which follows the likes of Coronation, Afrimat, African Rainbow Capital Investments and Huge Group, will take A2X’s total market value from R47.1bn to about R229bn.

This is still a fraction of the JSE all share index, with a market value of R11.6-trillion, but many times the size of rivals, ZAR X and 4 Africa Exchange.

What it means

Moreover, Sanlam’s secondary listing on A2X means shareholders can now choose to trade their shares on that bourse rather than on the JSE.

This is significant, considering that Sanlam is one of the JSE’s most liquid stocks and that A2X claims its trading costs are "upwards of 40% cheaper" than its larger rival. Four of the country’s largest stockbrokers, SBG Securities, Peregrine Securities, RMB Morgan Stanley and Investec Securities, are already trading on A2X.

A2X had observed narrower bid-offer spreads (the difference between the price to buy and the price to sell a stock) on its stocks compared with those of their JSE-listed equivalents, said CEO Kevin Brady. This was entirely a function of its lower cost to trade, which benefited stockbrokers and investors.

Stockbrokers and shareholders can now verify these claims, as real-time data coverage of securities listed on A2X went live on the Bloomberg terminal on Thursday. This was important in providing "full visibility of price and volume activity on A2X", as the majority of industry participants in SA used the Bloomberg terminal, Brady said.

"This will empower the industry to achieve best execution when transacting in listed securities across multiple exchanges," he said.

In markets such as the US, where multiple large exchanges have existed for some time, brokers are legally required to seek the best execution reasonably available for their customers’ orders. Factors to be considered include price, speed of execution and the likelihood that the trade will be executed. However, this is not yet law in SA.

Sanlam CEO Ian Kirk said the group’s A2X listing was in the interests of its shareholders and "provides an opportunity to participate in the ongoing development and overall growth of South Africa’s capital markets".

Sanlam’s longstanding black economic empowerment partner, Ubuntu-Botho Investments, is an indirect shareholder in A2X through its stake in the Patrice Motsepe-backed African Rainbow Capital Investments, which holds a 20% stake in A2X. It is 51.6% owned by African Rainbow Capital, which is in turn wholly owned by Ubuntu-Botho.

Brady said he was confident the listing of a company of Sanlam’s calibre would attract other issuers. A2X expected to list a mid-cap industrial company at the end of April.

ziadyh@businesslive.co.za

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