One of the crop of new alternative securities exchanges that have sprung up in SA in recent years, 4 Africa Exchange (4AX), is rebranding to become the Cape Town Stock Exchange after relocating from Johannesburg to the Mother City.
The exchange, which received its licence to list both equity and debt instruments in August 2016 and began operating in March 2017, is relocating to new offices in Woodstock. Its name change will become effective on October 1.
CEO Eugene Booysen says the rebrand was partly due to 4AX spotting a gap in the market to align its branding with that of a globally recognised city while also moving away from the “X” designation, which features in the monikers of several rival alternate exchanges such as ZAR X and A2X Markets. Then there is the continuing “semigration” trend which is seeing an increasing number of companies — and people — relocate to Cape Town from Johannesburg and other parts of the country.
“We looked at the members of the World Federation of Exchanges and noticed that the vast majority of its members are either named after a city or a country,” Booysen said. “The reality is that there is immediate recognition and value that people buy into when an exchange is named after a city. We’re looking to add to that brand value by also offering our issuers and investors a platform that can reduce the cost, risk, time and complexity of listing.”
Booysen said one of 4AX’s competitive advantages is being the only exchange in SA, aside from the JSE, that is licensed to house primary listings of both equity and debt instruments. The exchange has also adopted what it calls “investor friendly listing rules” and has invested heavily in technology over the past two years to ensure it has full control over cost pressures.
While 4AX’s move to Cape Town comes at a time when the JSE is losing listings as companies seek to escape the onerous and expensive bourse requirements, Booysen said he sees new listings possibilities with a combined potential market value of R2-trillion that he wants to attract to the new exchange. These range from start-ups to established small and midcap companies, though the bulk of this potential will be from companies that are not already listed. Only about 15% of the estimated R2-trillion in potential market value that 4AX aims to tap will come from companies already listed on the JSE.
“There are a lot of companies in the R25m to R2bn market cap range that could potentially list on our exchange. But while we see the bulk of the opportunity from companies that are operating in the unlisted space we will provide an alternative for companies that are already listed, which are unhappy with their current listing structures.”
By year end 4AX hopes to have already concluded five new equity listings as well as three medium-term note programmes. Booysen sees significant opportunity to house corporate debt instruments of small to midcap companies, which will be aided by the exchange’s new home in Cape Town — where most asset managers who buy such instruments are located. Another potential opportunity is to attract listings from the Silicon Cape, and other parts of Africa that are producing competitive technology-based offerings, such as Kenya.
“We are targeting technology companies, we have an ambition to be the Nasdaq of Africa,” Booysen said. “We also really think we can attract issuers from the rest of Africa as opposed to just SA.”
Lebashe Investment Group, owner of Business Day publisher Arena Holdings, is the largest shareholder in 4AX.
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