Adrenna Property Group, which owns just one property and has a market value of R55.9m, says it will pay up to R26.2m to buy out certain shareholders and delist from the JSE.

A number of small-cap firms have left or announced plans to leave the JSE recently, citing onerous regulatory requirements and costs amid a depressed appetite for shares in that segment of the market.

Financial services company Efficient Group said in July it might delist after a private equity company made an offer to buy out minority shareholders. Others that have already exited the bourse or announced plans to do so include retailer Verimark, logistics provider Cargo Carriers, mining group eXtract and industrial firm Torre Industries.

Between January 2018 and Wednesday there were 35 terminated listings, the JSE said. While the exchange lost listing fees, some of these stocks, such as Bonatla Property, had suspended listings for a number of years and had not paid all of their fees.

Independent analyst Anthony Clark said 10% of all small caps on the JSE were either under cautionary or in the process of discussing buyouts or share buybacks, which showed there was deep value in the sector.

“It really doesn't surprise me that given the incredibly low valuations that are currently there, companies are jumping on the bandwagon and just delisting from the JSE. If you strip out the costs associated with staying on the JSE — the regulatory details, the reports, the costs — a small company can save between R3m and R5m a year,” he said.  

Adrenna, which listed in 1999, has turned to the market for funding only once since then. The landlord’s only asset is a commercial industrial complex in the Western Cape. Its listing had been costly and had increased the administrative burden, it said. Being public had also not bolstered its image in the market, given its size.

“Furthermore, efforts during the past financial year to diversify the company’s operations in order to enhance shareholder wealth have been delayed by the onerous and costly compliance requirements associated with being a listed entity.”

Adrenna said that based on the pledges of shareholders, the most it would have to pay investors to delist would be R26.2m. The company said it would pay R1.30 a share to buy out those investors who had agreed to sell. Its shares were last traded at R1.