Africa-Press – Namibia. LAST December, the Johannesburg Stock Exchange (JSE)’s private placements arm obtained a financial services provider licence, giving it the green light to assist unlisted companies and entrepreneurs raise debt and equity on its digital and automated marketplace platform.
Since obtaining the financial services provider licence, 20 institutional investors with about N$10 billion to deploy have subscribed on the electronic platform and are looking to fund companies and infrastructure projects raising debt of N$1 million and above, and equity of N$20 million and above.
In South Africa, private placements are traditionally conducted manually, but JSE Private Placements (JPP) has automated the process to make it more efficient and seamless.
JPP’s services are offered in partnership with Globacap, a UK-based capital markets technology company in which the JSE owns a minority stake.
Over US$10 billion of private share and debt instruments are digitally managed on Globacap’s platform for over 80 companies and 4 300 investors.
“JPP, a key component of the JSE’s revenue diversification and growth strategy, is an online match-making platform that connects issuers seeking to raise equity or debt capital with investors that are looking for companies to invest in,” says Sam Mokorosi, the JSE’s head of originations and deals.
Private placements are a different form of capital raising that enable unlisted companies to raise equity or debt funding to pre-selected investors and institutions rather than going the traditional route of raising capital on a public market like a stock exchange.
In other words, private placements are an alternative to an initial public offering for a company looking to raise capital in an open market to expand its operations.
“The launch of JPP demonstrates the JSE’s commitment to taking the lead in South Africa by advancing innovation in capital raising for unlisted companies.
With this platform, the JSE aims to assist in narrowing the funding gap of between N$86 billion and N$346 billion that is required by medium enterprises to expand their footprint,” says Mokorosi.
Professional and institutional investors have indicated that they are scouting for opportunities across a wide range of industries spanning mining, commercial farming, property, infrastructure and technology.
Additionally, venture capital investors have an appetite for tech firms in the early stages of development.
There is also asset-backed debt funders suited for small and medium enterprises that want to purchase office or yellow equipment such as tractors and bulldozers.
“Lenders on the platform are also interested in providing invoice financing to companies that are unable to raise credit from commercial banks due to lack of trading history but can use unpaid invoices as collateral. Lenders have also shown interest in offering short-term loans to companies that have tenders but lack the working capital to execute or fulfil those contracts,” Mokorosi explains.
The platform will be upgraded later this year to assist investors to exit their positions from the companies they have invested in.
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