IN A SUPREMELY ironic sweep, it has taken some clever corporate minds from Johannesburg to devise a cunning plan to launch the Cape Town Stock Exchange (CTSE).
There have been sporadic rumblings around a local stock exchange over the decades, but the furthest that such an idea ever got was a half-hearted attempt to create an index of Cape Town-based companies that traded on the JSE.
The CTSE is far more tangible, and – if suitable traction is found – could be a major catalyst in spurring economic growth in the Western Cape.
How the new exchange transpired is rather interesting. From the start of last month an existing stock exchange 4AX – which was one of four new stock exchange licences issued in recent years – will re-brand to become the Cape Town Stock Exchange (CTSE).
The bourse – which is one of two fully fledged, licensed and regulated stock exchanges in SA – has already relocated to a new head office in Cape Town. That means the CTSE kicks off with a handful of listings already trading on its board. Interestingly, this is not the first time Cape Town has hosted a stock exchange. The city briefly had its own stock market around the turn of the 20th century.
Outlining the rationale for the shift, CTSE CEO Eugene Booysen said Cape Town was synonymous with growth, innovation and had a focus on technological development. “We know it’s going to be a great fit.”
He said that the CTSE’s focus intensified on small- and medium-sized companies. “We believe that these growing enterprises offer huge potential to investors. They and the people who make them tick, are this country’s real assets.”
The CTSE’s cloud-based platform and reduced fees should make listing on a stock exchange a simple and affordable option for smaller businesses. This is a smart pitch with a good number of small companies on the JSE opting to delist – citing onerous regulations and the costs of maintaining listings as some of the drawbacks.
The technology hub in and around Stellenbosch might also provide rich pickings for the CTSE. Allowing tech-entrepreneurs to easily and efficiently raise capital would surely set the CTSE up as a hub for innovation funding, something that could very easily snowball if early momentum is found.
Yaw Peprah, acting CEO of Wesgro, argued that the opening of the CTSE signified Cape Town’s capabilities when it came to landing significant business for the region – and would reinforce the city’s place as the financial services hub on the continent.
Peprah noted the service economy contributed an estimated 75.5% to the Western Cape’s GDP. “The CTSE will provide a platform for existing funders to gain exposure to quality assets as well as enhanced investment opportunities. As Africa’s Tech Capital, we have the ecosystem to support tech-led, innovative business solutions and we’re proud that the continent’s new international stock exchange will be headquartered in Cape Town”.
The launch of the CTSE coincided with the listing of Mpumalanga-based agricultural business TWK Investments, which has a market value of R1.3 billion. TWK’s listing may well attract other agribusiness listings to the CTSE. Two more new listings are reportedly in the pipeline, with indications that one might be Port Elizabeth-based agribusiness BKB.
Existing listings on the CTSE include Heartwood Properties, assurer Assupol, renewable energy business GAIA, iHealthcare, NWK and CA Sales. The collective market value of the CTSE is around R10 billion.
The existing 4AX Registry Services and 4AX Debt Services will also be rebranded to CTSE Registry Services and CTSE Capital Solution.