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Overview of the JSE. Agenda . Overview of the JSE Do you know how your business can benefit from listing on the JSE? What is the difference between Altx and Main Board? Recent JSE developments. JSE in the Global context. Key JSE achievements:

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agenda
Agenda
  • Overview of the JSE
  • Do you know how your business can benefit from listing on the JSE?
  • What is the difference between Altx and Main Board?
  • Recent JSE developments
jse in the global context
JSE in the Global context
  • Key JSE achievements:
  • The latest World Economic Forum (WEF) Global Competiveness Report ranks South Africa first out of 148 countries for regulation of securities exchanges for the fourth consecutive year
  • Ranked 4th in the world in terms of value of bonds traded on an exchange according to the World Federation of Exchanges (WFE)
  • One of the top 20 exchanges in the world in terms of market cap
  • Ranked no 1 stock exchange in Africa in Euromoney’s annual survey Best Managed Companies in Africa 2013
sa jse in the g lobal context
SA / JSE in the global context
  • Member of World Federation of Exchanges
    • The JSE is the only Sub-Saharan African member of The World Federation of Exchanges (“WFE”), a highly esteemed global regulatory body
    • WFE membership is based on five criteria:
      • be significant within its country of origin
      • be regulated by a supervisory body, within a statutory framework
      • capital raising and risk management
      • public good
      • standards and fees
  • SA in a global context
    • The World Economic Forum’s annual World Competitiveness report showcases the world-leading position of the JSE as a financial market and South Africa as capital market destination
brics opportunities
BRICS opportunities
  • MOU signed by participating BRICS exchanges
    • Resulted in a joint initiative to expose investors to the BRICS economies, through cross-listing products - BRICSmart
    • The Initial, 1st phase offering, now gives investors access to derivatives on Brazil’s IBOVESPA, Russia’s MICEX Index, India’s SENSEX Index, China’s Hang Seng and Hang Seng China Enterprises Indices and South Africa’s FTSE/JSE Top40 Index
    • Apart from cross-listing products, other opportunities will be explored to promote greater development and understanding amongst the respective markets
  • Companies with listings on the JSE (equity and debt) may be included in these cross listed products in future
    • This means they will be listed on participating BRICS exchanges in Brazil, Russia, India and China, which greatly increases their exposure to investors
net purchases sales by non residents
Net purchases/sales by non-residents
  • Non-residents ploughed R85.4 billion (in net terms) into the domestic bond market in 2012, up from R35.7 billionin 2011
  • In October 2012, 11 of South Africa’s government bonds became the first African bonds to be included in the Citi World Government Bond Index (these bonds have a combined weighting of 0.41% in the Index)
  • The only other emerging markets to be included in the WGBI are Malaysia, Mexico and Poland
ftse jse indexation
FTSE/JSE indexation
  • The FTSE/JSE Africa Index Series is designed to represent the performance of Southern African companies, providing investors with a comprehensive and complementary set of indices, which measure the performance of the major capital and industry segments of the African market
  • From 1995 until 2013, South Africa Stock Market (FTSE/JSE) averaged 16216 Index points reaching an all time high of 44453.88 Index points in September of 2013 and a record low of 4308 Index points in September of 1998
  • The FTSE/JSE All Share Index is a major stock market index which tracks the performance of 160 companies listed on the Johannesburg Stock Exchange in South Africa. It is a free-float, market capitalization weighted index
funds under management excludes institutional investment
Funds under management (excludes Institutional investment)

Lisp Total Sum of Assets

R 81 865 348 233

Collective investments total

R1 199 807 578 842

Long Term Insurance

R1 738 281 842 769

why should your company list on the jse

Taking your company to the next level:

Accessing capital for growth

Profiling your business

Using your shares to make acquisitions

Exiting shareholders

Incentivising staff - attract and maintain good employees

Enhance dealings with banks, suppliers, distributors and customers

Why should Your Company List on the JSE?
fundamental changes in the regulation creates opportunities
Fundamental changes in the regulation creates opportunities

Medium term budget policy

October 2011

“The National Treasury has announced that local investors will now be able to trade in foreign domiciled companies listed on the JSE, boosting the status of South Africa’s bourse as a springboard for foreign companies to expand into Africa”

Benefits for investors

  • SA investors are not limited to invest in only South African companies but also foreign companies listed on the JSE
  • The JSE’s regulatory standards and governance requirements may provide comfort to investors
fundamental changes in the regulation creates opportunities1
Fundamental changes in the regulationcreates opportunities

Budget Speech

Review 2013

National Treasury announced their support for South African companies that want to expand into the rest of Africa and offshore. Each Johannesburg Stock Exchange listed entity will be entitled to establish one subsidiary to hold African and offshore operations (HoldCo), which will not be subject to foreign exchange restrictions. This will incentivise companies to manage their African and offshore operations from South Africa, maximising the benefits to South Africa’s economy. Transfers from the parent company to HoldCo will be allowed up to R750 million per year. Additional amounts may be considered on application to the Reserve Bank.

Benefits to South African and African companies

  • Listing allows for index inclusion
  • Capital raised on the JSE is freely transferable out of South Africa
  • Diversity shareholder base and get access to new sizeable pools of equity
  • South Africa has a large domestic investor pool (top 15 investors have FUM of more than USD500bn)
  • JSE is a major destination for global emerging market funds
  • South Africa holds a significant weighting in emerging markets and attracts a substantial amount of foreign investment
  • Listed JSE shares may be used as transaction currency for future acquisitions
  • Numerous listed peers, which will promote research coverage and investor interest
  • JSE likely to provide greater liquidity South Africa is well banked, with a broader range of broker coverage by both international banks and local operations
main board market capitalisation by industry
Main Board market capitalisation by industry

Technology

0%

Telecoms

7%

Oil and Gas

4%

Utilities

0%

Industrials

65%

Basic Materials

20%

Health Care

3%

Financials

19%

Consumer Goods

32%

Consumer Services

10%

overview of main board corporate activity
Overview of Main Board corporate activity

5

1

3

4

R2,7bn

R 17, 6bn

R5,1bn

Ascension Prop

Delta

Transaction Cap

Life Hlth R5,8bn

Royal Bafokeng R2,9 n

Rebosis R 1,6 bn

Inv Prop Fund R850 m

life healthcare case study
Life Healthcare Case Study

Price Performance

Trading volumes

slide19
AltX
  • Platform for small to medium sized, entrepreneurial,high growth companies, family owned businesses
  • Distinct listing requirements
  • 59 companies listed on this board
  • Market Capitalization R15.7 billion
  • Trading and settlement same as Main Board
history
History
  • AltX started in October 2003 (replaced old DCM & VCM)
  • AIM / NASDAQ / Mothers / SESDAQ / TSXV

January2004

2004

2005

2010

2011

2012

2006

2007

2008

2009

First listing

10 listingsmarket cap R1bn

40 listingsmarket cap R9bn

85 listingsmarket cap R18bn

68 listingsmarket cap R10.2bn

63 listingsmarket cap R13.3 bn

17 listingsmarket cap R1.9bn

79 listingsmarket cap R30bn

76 Listingsmarket cap R11bn

66 listingsmarket cap R15.3bn

overview of altx corporate activity
Overview of AltX corporate activity

1

2

Kibo

Curro

Rockcastle

Global Asset Man

Waterberg Coal Company

R 90m

R 150k

R 5,8m

RGT Smart

altx market capitalisation by industry
AltX market capitalisation by industry
  • 59 companies are listed

Utilities

0%

Tech and telecoms

6%

Consumer Goods

2%

Industrials

13%

Consumer Services

2%

Healthcare

0%

Financials

66%

case study ellies holdings
Case Study – Ellies Holdings

Price Performance

Trading volumes

  • Ellies is a leading manufacturer and distributor ofelectronic products
  • Raised R104 million through private placement
  • Transferred to the main board , 26 November 2010
  • Constituent of the small cap index
new developments listing vehicles
New Developments ( listing vehicles)

Special Purpose Acquisition Company (SPAC)

A publicly-traded buyout company that raises money in order to pursue the acquisition of an existing company

Sweden

Netherlands

Canada

2

1

5

Germany

1

3

90

1

10

USA

South Korea

Austria

UK

1

Malaysia

Source: Bloomberg

overview of spacs
Overview of SPACS
  • Time frame for acquisitions:
    • 24 Months ~ inline with acquisition criteria
    • If no acquisition made net IPO assets ( i.e. cash) is distributed to shareholder
  • Acquisition consideration:
    • Cash
    • Debt
    • Shares
  • Excess cash:
    • Growth capital
    • Acquisitions
  • Shareholders:
    • Vote to approve acquisition
reit s
REIT’s

Real Estate Investment Trust (REITs)

REITs are corporations that own and manage a portfolio of real estate properties and mortgages

CISIPS

6

PLS

23

Company

15

overview of reits listing requirements
Overview of REITs listing requirements

Asset Class

  • R300 million size of portfolio (gross assets)
  • Property entity & section 13
  • 75% rental revenue
  • Risk management process exists

Gearing

  • Confirm have 60% gearing ratio
  • Latest audited or reviewed results or more recent pro formas
  • Undertaking to restrict gearing on going basis

Distribution

  • Confirm will qualify in terms of Tax Act
  • Undertaking to distribute 75% ofcompany tax net profit
  • Tax disincentive to retain group tax income