The JSE Ltd. is trying to make it easier for companies to list on the exchange and encourage them to stay listed while also increasing the liquidity of small-cap stocks and ramping up its unlisted fundraising.
This plan was outlined by the head of origination and deals at the JSE, Sam Mokorosi, who told CNBC Africa that the company has seen positive results from its efforts so far.
Mokorosi noted that the delisting trend seen on the JSE is a global phenomenon and is not limited to it.
Even the world’s deepest capital markets in the United States have seen listings decline from 7,500 at their peak to just over 3,000.
This is due mainly to the rise of private equity and venture capital, which has allowed companies to raise funds outside the public markets.
Mokorosi said it is important to note that the number of delistings the JSE has experienced this year is not high compared to historical levels.
“What we are really struggling with is the number of new listings, so that is where our effort is,” he said.
In response, the JSE has implemented measures to encourage companies to list on the exchange while making it less burdensome for them to remain listed.
Central to this is reducing the listing requirements to make it easier for companies to comply with them and make it less onerous to be on the exchange.
However, Mokorosi noted that this is very difficult to do without decreasing investor protection, resulting in this process taking longer than expected.
Some of the measures implemented so far include the ability for companies to have dual-class voting shares, red tape being cut, and sector-specific REITs able to be listed.
He also emphasised that most of the listing cost does not come from the JSE itself but is rather driven by the need to hire non-executive directors, increased audit fees, advisory costs, and potential changes to the company’s board composition.
In 2023, the JSE had three new listings – Premier Foods, Primary Health Properties, and Copper360.
“We are starting to see some momentum, and our pipeline is looking good. Market dynamics are against us, but we will continue to try to bring new listings in,” Mokorosi said.
The JSE has also begun looking globally for companies to have their secondary listings on the exchange, focusing on the UK, Europe, and Southeast Asia.