Sagarmatha applies for offshore listing
CAPE TOWN – Sagarmatha Technologies Limited, a multi-sided African platform technology group, has started the process of securing an offshore primary listing and has been engaging with the SA Reserve Bank (Sarb) and the National Treasury.
A source within the company revealed that Sagarmatha had approached the Reserve Bank in December 2018, informing it of its intention to list on two global stock exchanges.
Sagarmatha appointed Vunani Corporate Finance as a corporate adviser.
“It was communicated by the Financial Surveillance Department (FSD) that based on the discussions held, Sagarmatha met the requirements for a primary offshore listing and that Sagarmatha operates within the industry that qualifies it to apply for an expedited approval through the FSD,” said a Vunani spokesperson yesterday.
According to the Sarb’s Currency and Exchanges Manual for Authorised Dealers, unlisted technology, media, telecommunications, exploration and other research and development companies may apply to the FSD for approval to primary list offshore to raise foreign loans and capital for their operations. The Vunani spokesperson said this was Sagarmatha’s plan in line with President Cyril Ramaphosa’s vision to inject foreign investment into the country.
Sagarmatha initially moved to secure a primary listing on the JSE, but was unsuccessful due to a technicality raised at the 11th hour. Sagarmatha intends to secure a secondary listing on a local bourse in line with the FSD requirements.
The spokesperson emphasised that this move was effectively an inbound investment strategy meant to benefit South Africa and Africa as a whole, compared with other firms that raised capital through a domestic listing then moved offshore as soon as the investment bore fruit. Vunani was requested to submit the Sekunjalo Group Structure to the Reserve Bank for them to better understand the statutory structure of the group, and to explain the reasons for negative media articles against the group.
The FSD in January stated that the Sagarmatha application had been referred to the Treasury. Various communique between Vunani, Standard Bank and FSD followed.
Vunani contacted the FSD on numerous occasions requesting an update on the status of the application, to which the FSD indicated that there had been no response from the Treasury. According to documents seen by Business Report, the Treasury responded on the 8th and 25th of March, simply stating “no response from Treasury”.
Due to the delays in approving the listing application, a meeting was held on April 15 between Vunani and the FSD to discuss the reasons for such delays. It was again communicated to Vunani that due to the media attention focused on the Sekunjalo Group at the Mpati Commission, the Reserve Bank required additional information and requested that the Treasury approve the application.
Vunani advised that Sagarmatha did not raise any funds from the Public Investment Corporation (PIC), whereby the Reserve Bank requested that this must be documented and addressed to them and that they would share this information with the Treasury to assist them in making a decision.
On June 12 Vunani followed up, requesting an update. The FSD indicated that the Treasury had advised them that the Sagarmatha application would “be kept in abeyance until the PIC Commission Report has been finalised and recommendations are addressed”.
In the latest communique between the FSD and Vunani, after another follow-up request by Vunani on an update on the request for the offshore listing, the FSB advised that, in order to proceed, they would require a fresh application with updated salient details covering, inter alia, the relevant aspect of the outcomes of the PIC Commission.
Sagarmatha owns and develops integrated technology platforms, including content management systems, data management systems, automated marketing and merchandising software, e-commerce technology platforms with enterprise resource planning systems, social media platforms, research functionality, video platforms, augmented reality and user-generated content platforms applications, online website creation tools, mobile and online applications.
Sagarmatha is uniquely positioned to create an integrated multi-sided platform ecosystem in Africa that knits technology platforms, content creation and e-commerce into a consolidated value proposition aimed at attracting prime customers.
The consumer opportunity in Africa rests on five key pillars: the rise of the middle class (expected to grow to 500 million consumers by 2030); exponential population growth; the dominance of youth demographics is expected to grow to 321+ by 2030; rapid urbanisation and fast adoption of digital technologies (mobile is fast becoming the primary channel for accessing the internet).
The potential growth is significant, with only 20percent of the population online, compared with nearly 75percent in Europe and 32percent in Asia.
The Sagarmatha strategy consists of a consolidating offering to audience, customers and advertisers, built on proprietary technology, positioning Sagarmatha to become a leading multisided platform group in Africa.
I question why the Sarb referred the request for an offshore listing of Sagarmatha to the Treasury for approval, “pending the outcome of the Mpati Commission of Inquiry” when the PIC has not been approached to invest in Sagarmatha’s offshore listing? Sagarmatha aims to employ and train more than 5000 young African data engineers and software developers.
Sagarmatha is on track to raise more than R4billion from global investors for South Africa and Africa; this is in line with Ramaphosa’s drive to attract foreign direct investment and to alleviate unemployment.