CAPE TOWN - JSE-listed Peregrine Holdings, a wealth and asset management firm, on Friday plans to de-list following an offer from private equity firm Capitalworks, joining a growing list of companies that have left the stock exchange because of high costs and falling share trade volumes and prices.
Global markets have been in turmoil over Covid-19 for the past two weeks.
The FTSE/JSE All Share Index (Alsi) fell 9.72percent on Thursday, its steepest drop since 1987.
It regained some ground on Friday morning, rising 3.25percent, but ended the day 0.28percent lower. The Alsi was down 16.5percent over the week.
Markets.com chief market analyst Neil Wilson said in a note: “We are witnessing total liquidation of investor positions literally cash is the only thing investors want there is real systemic risk, with markets pricing for a global recession.”
Peregrine, which includes wealth manager Citadel and asset managers Peregrine Capital, had been under pressure from declining activity on the JSE before the recent volatility, which has weighed on its advisory division, Java Capital.
Its R21 offer to shareholders represents a 22percent premium to Peregrine’s closing share price on Thursday, although its share price gained 10.4percent on Friday,
Capitalworks has about $1billion (R16.16bn) in private equity funds under management. It invests in a range of investments in mid-market companies operating mainly in South Africa.
The firm wants to de-list for shareholders to realise value at a premium to the recent share price, or retain its shareholding with Capitalworks’ financial backing, while the costs associated with the listing “will be eliminated”.
Last Monday, iron-ore mining group Assore, listed since 1950, made an offer to buy out minorities as its very low free float of shares (4.2percent), made the share price “particularly volatile” and difficult to buy by institutional investors.
Volatile and low share prices and volumes make it difficult for companies to raise capital on the market - one of the key functions of listing on a public market.
In February, according to statistics from the JSE and elsewhere, there were 344 companies listed on the JSE, down from 359 last July, and 372 in July 2018, and nearly down by half compared with 601 in 2001.
The decline has been blamed primarily on the weak economy, which has slowed the listing of new companies, while many smaller listed companies left the bourse after being acquired, or de-listed for other reasons.
PSG Investment portfolio management Amelia Morgenrood said recently the total value of trades in the equity market was down 63percent from October to December 2019, the total volume of trades was down 58percent, and the number of trades declined 61percent.
These were “significantly more substantial declines” than what was seen over the same period in 2018, where the reductions were 31percent for value, 4percent for volume and 30percent for the number of trades.
The JSE failed to respond by the time of going to print on Sunday to Business Report’s questions sent to it on Friday.