By Paul Miller
It give me no pleasure to report that 2023 was the worst year for new equity listings since we began tracking the statistics in 1994. It is such a dire performance that I suspect that it might just be the worst year for new listings since the JSE's founding in 1887, but I have not been able to find any records to back that assertion up.
Just three new companies came to market on the JSE in 2023 - Premier Foods, Copper360 and Primary Health Properties. Premier Foods came to market by way of a private placement of shares by a vendor; Copper360 issued new shares; and Primary Health was a technical inward dual listing by introduction.
Interestingly challenger stock exchange, the CTSE, actually matched the JSE's performance, by also listing 3 new, albeit much smaller, companies. Thibault REIT, GAIA Renewable REIT and Runway Property Group - in fairness however Runway Property had previously been listed on the ZARx exchange and transferred its listing to the CTSE when the ZARx closed.
There are currently 291 companies with listed securities on SA's 3 licensed stock exchanges.
On the flip side the delistings trend continues to accelerate, especially when expressed as a percentage of the remaining listed companies. This effect compounds over time and the eventual likelihood of the JSE hosting only 100 or so large, liquid companies, many of which will be foreign inward dual listings, does not seem unrealistic.
27 companies delisted in 2023, 24 on the JSE and three when the ZARx closed.
Unusually there are only 3 additional delistings that appear locked in for early 2024. This is a lower number than in previous years.
There are also currently 12 companies that have had their shares suspended from trade - and as is generally the case, very few will return to the boards.
There is a real danger that the local financial ecosystem will permanently lose the skills and experience required to conduct new listings and capital raisings. Those who have experience are either aging out or have had to change career paths to survive. We have already seen the number of stockbroking firms decline dramatically, and the remaining ones are unlikely to retain back office staff with experience in corporate actions and IPOs if these transactions hardly ever happen.
It can't be much fun as a equity capital markets specialist in a local investment bank or boutique adviser with these levels of activity. This is especially true when you consider that foreign companies with secondary listings on the JSE now account for about 65% of the gross market capitalisation of the JSE, but purchase few of their financial services locally.