Nicola Mawson
The Johannesburg Stock Exchange (JSE) has lost another listing, with London-based London Finance & Investment Group, a small cap worth some R483.7 million in South Africa, announcing yesterday that it would stop trading on both the local bourse and the London Stock Exchange.
The firm, an investment company whose assets consist primarily of a general portfolio of global equity stocks, is the latest entity to leave the JSE.
This follows the departure of companies such as African Equity Empowerment Investments, wealth and asset management firm Peregrine Holdings, Royal Bafokeng Platinum, Distell, Mediclinic International, and the PSG Group. Last year alone, 23 companies exited the exchange.
The bourse has shrunk by at least 50% in the last 20 years, from about 600 companies in the early 2000s to about 300 now, according to a column by Denker Capital’s Claude van Cuyck and Muneer Ahmed.
However, there have been several listings on the JSE this year, notably Rainbow Chicken, WeBuyCars, and Boxer, which was unbundled from Pick n Pay.
Writing in September, Vongani Masongweni, a quantitative research analyst Momentum Investments Group, said “it’s the imbalance between new listings and de-listings that poses the primary concern. Although de-listings have increased in recent years, the reluctance of new companies to enter the market appears to be the main issue,” she noted.
Masongweni added that, even though there was a reduction in the number of listed companies, the JSE’s overall market capitalisation increased over the same period. This indicates a concentration of value among select firms.
“Notably, the proportion of companies with a foreign primary listing on the JSE has risen significantly, from 4.3% to 20.4% of total listings,” she said.
In April, the bourse said it was considering amending its listing requirements to make it easier for smaller companies to raise capital and lower the compliance cost burden.
In a statement issued to shareholders yesterday, London Finance & Investment Group said, among its considerations when debating leaving the bourse, was the “rising cost of being a listed company”.
It will be returning cash, excluding closure costs, of some 70p (R1.60) to shareholders. London Finance & Investment Group’s 2024 annual report indicated that it held stakes in companies such as Exxon Mobil, Deutsche Post, Shell, Unilever, Procter & Gamble, Microsoft, and Apple.
In a recent statement on the LSE, London Finance & Investment Group said that this return to shareholders would be undertaken through a court approved capital reduction. The company will then be wound up through an “orderly winding up,” it added.
As of November 4, it held cash balances of £23.2m (R532.4m), which was held on short-term fixed deposits in Sterling and US dollars earning interest at rates of approximately 4.7% pa.
BUSINESS REPORT