SPONSOR AND ADVISER
Vunani takes a hit on Sagarmatha’s failed listing
The Vunani share price slumped 58% on Friday at the end of what had been a dramatic week for its high-profile client, Sagarmatha Technologies. The AltX-listed share, which is rarely traded, dropped from R3 to close at 126c in low volume trade on Friday.
Vunani, which is a black-owned financial services boutique, was the sponsor and transaction adviser to Sagarmatha’s proposed JSE listing.
In 2016, Marcel Golding paid R48m to subscribe for just more than 30-million Vunani shares at a price of 160c a share. The deal gave the former Hosken Consolidated Investments chairman a 20% stake in Vunani, which is headed by Ethan Dube.
The Sagarmatha listing did initially secure JSE approval, but this approval was withdrawn two days before the listing date.
Sagarmatha said it received notification from the JSE that it was noncompliant with section 33 of the Companies Act and therefore was noncompliant with the JSE’s listing requirements. Section 33 requires firms to submit annual returns and financial statements to the Companies and Intellectual Property Commission.
While the JSE came in for criticism for giving the go-ahead to the listing without verifying all the details, the stock exchange’s view is that checking all the details is the responsibility of the sponsoring broker.
Vunani has referred all questions on the matter to Sagarmatha. It has not responded to queries about payment for its work on the prelisting process.
The prelisting statement reveals that Vunani’s advisory fee was R29m. It is unclear whether payment of part or all of this fee was contingent on a successful listing.
Java Capital and PSG Capital are also referred to in the pre-listing statement as providers of sponsor services. PSG Capital received R20.2m for services "rendered to the company in the approximately seven months … leading up to the issue of this prelisting statement", according to the prelisting statement. In the press statement confirming it would not be listing, Sagarmatha incorrectly listed PSG Wealth among those that supported it.
A black economic empowerment analyst said it was unfair to criticise the JSE. "My experience is that they try to accommodate listings and they seem to have done so here. The most recent financial information contained in the initial prelisting statement was 2016 — that’s stretching it," said the analyst, who did not want to be named.
The listing was amended from the prelisting statement’s April 6 to 11 and then April 13.