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Johannesburg - The expansion of the JSE's Africa Board is being held up as regulatory authorities in Africa are wary of the intentions of the South African bourse.
That's according to the JSE's new business development manager of the Africa Board, Geoff Musekiwa. On Tuesday, he said many African-based companies were keen to pursue a listing on the JSE, but get bogged down by negotiations with their local authorities and the need to follow "due protocol".
"Many of these exchanges are concerned about us taking liquidity out of their markets by attracting them to the JSE," Musekiwa said. "But truth be told, many of these smaller markets cannot accommodate the funding requirements and it ends up becoming a political thing."
The JSE established its African board in 2009, but managed to attract only one listing - Namibian financial services firm Trustco - to date.
A backer has described this company as unattractive, after being informed he would not be allowed to trade more than 12 000 shares at a time due to the small number of stocks listed.
'All systems go'
For a share trading at 57c, this means a maximum deal size of less than R7 000. Two asset managers and a stockbrokerage concurred with this opinion. They said they would not recommend Trustco to clients, irrespective of the company's merits, because the stock was too illiquid.
As a remedy, Musekiwa said it was crucial for companies considering a listing to make at least 10% of their issued share capital available as a free-float, especially if they were serious about attracting institutional investors.
Another issue is whether the JSE is doing enough to promote the listings. This would include introducing asset managers to companies and their managements.
Musekiwa attributed the single listing in part to 2009's prevailing economic climate. "Last year was all about outreach, but in 2010 it's all systems go," he said.
He described the development of sound relations between listed groups and institutional investors as a "vital leg" in the JSE's Africa Board strategy, and said the bourse was constantly seeking opportunities to liaise with fund managers targeting Africa.
- Fin24.com