Johannesburg - Johannesburg chartered accountant, Francois Venter, is planning to launch an alternative stock exchange that would focus on helping develop small and medium enterprises (SMEs).
Venter said he was hoping that the SA Financial Exchange (Safe) would rival the JSE when it came to raising funds for small businesses, and he was also hopeful that this exchange could help create up to 500 000 jobs over the long term.
Safe’s target is to list at least 1 000 companies, each with a turnover of between R15 million and R800m, over the next ten years. “The idea of a country run by one stock exchange is completely outdated. India has four national and 20 regional stock exchanges, while west Africa has at least eight regional exchanges,” said Venter. “We are working with a couple of regional bodies.”
Venter said a consent order had been signed with the Financial Services Board (FSB) paving the way for the licence that Safe had applied for three years ago.
“After nearly three years of liaising with the FSB, Safe is now on the brink of finalising its rules and listing requirements and hopes to get its exchange licence in 2016.
“Between 60 000 and 120 000 jobs will be created in the short term and a half a million in the long term.”
According to Venter, a former Bond Exchange of South Africa executive and founder of the Seychelles Financial Exchange, local development agencies had indicated their interest in the exchange as had asset management firms and financial institutions.
“Once established, Safe will provide a South African and pan-African listing and trading platform for South African- and African-focused securities with global connectivity to international exchanges, clearing houses and investment banks that will drive liquidity through the South African and the African capital markets,” said Venter.
South Africa did not have a mechanism to develop SMEs, and founding Safe was a step towards creating an investment culture in South Africa and challenging the “JSE monopoly”, he added. The JSE is the largest stock exchange in Africa.
Safe’s model was to develop markets based on proven global market practices, like those adopted by the Nasdaq in the US, and AIM in the UK.
Less onerous
“Exchanges are not just there to list and trade for large corporates. They have a fundamental duty to help smaller business raise capital.”
“As an alternative to the JSE, Safe will give SMEs the opportunity to have a presence on a recognised exchange without having to meet the often onerous and costly JSE listing requirements.”
The impending launch of Safe comes amid news that the International Monetary Fund has cut its 2016 growth forecast for South Africa to 0.7 percent, after the economy narrowly avoided falling into a recession last year. However, South Africa’s dismal economic growth did not deter Venter’s vision to create the exchange.
“The project can address the economic problem and help to create an environment to help foreign investment in South Africa,” said Venter.
Venter said Safe’s initial application was for venture capital, SMEs and mid-cap board.
The new exchange intended to open 10 boards in a period of three years.
BUSINESS REPORT