Technology firm EOH, which is fighting to grow its business following a governance scandal that wiped out billions from its market cap, will offer its shares through a secondary listing on Johannesburg's A2X exchange as a way to make trading of its securities easier for investors.
On Thursday, EOH — already listed on the JSE — said its ordinary shares would be traded on the A2X with effect from August 13.
Megan Pydigadu, the group’s chief finance director, said: “EOH’s decision to list on A2X will give our shareholders access to an additional platform with lower transaction fees. This is in line with the group’s commitment to continuously find ways to increase value for shareholders.”
EOH, currently worth R1.1bn, will retain its listing on the JSE and its issued share capital will be unaffected by the secondary listing on A2X, making the stock available on both exchanges.
The company has been fighting to regain credibility after revelations of a corruption scandal surfaced. In September 2018 the group brought in Stephen van Coller as CEO to turn around the group. Van Coller appointed law firm ENSafrica to investigate allegations of fraud and corruption. The investigation found underhand dealings with its government client, including transactions worth more than R600m with no evidence of valid contracts being in place or for which no work was done.
With a lot of work having been done to correct the wrongs of its previous management, including a case brought against former CEO Asher Bohbot and others for closing their eyes to a culture of corruption and financial irresponsibility, the group is now looking to head down a growth path, having recently reported its first operating profit since the old regime stepped down.
A2X, which began trading in October 2017 and is partly owned by Patrice Motsepe's African Rainbow Capital, is a licensed stock exchange authorised to provide a secondary listing platform for companies.
A2X says EOH's listing will bring “the number of instruments available for trade” on the exchange to 53 with a combined market capitalisation of more than R4-trillion. The technology company joins others on the A2X, including Naspers, Prosus, Sanlam, Sasol, Aspen Pharmacare, Exxaro, AVI, Mr Price, Growthpoint, Momentum Metropolitan and Famous Brands.
In March, tourism player Sun International received approval for its secondary listing on A2X. At the time, the exchange had 40 companies listed — a sign of its growth trajectory.
In a statement, Kevin Brady, CEO of A2X Markets, said: “EOH’s ability to use the latest technology to cut costs and drive more efficient business practices resonates with us and we look forward to demonstrating the benefits a listing on A2X brings to their shareholders.”
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