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JSE’s private equity and debt raising digital platform gains traction

Since obtaining the FSP license, 20 institutional investors with about R10 billion to deploy have subscribed on the electronic platform.

Since obtaining the FSP license, 20 institutional investors with about R10 billion to deploy have subscribed on the electronic platform.

Published Apr 5, 2022

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In December 2021, JSE Private Placements (JPP), a wholly-owned subsidiary of the Johannesburg Stock Exchange (JSE), obtained a financial services provider (FSP) license, which gave it the green light to assist unlisted companies and entrepreneurs raise debt and equity on its digital and automated marketplace platform.

Since obtaining the FSP license, 20 institutional investors with about R10 billion to deploy have subscribed on the electronic platform and are looking to fund companies and infrastructure projects raising debt of R1 million and above, and equity of R20 million and above.

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In South Africa, private placements are traditionally conducted manually, but JPP has automated the process to make it more efficient and seamless. JPP’s services are offered in partnership with Globacap, a UK-based capital markets technology company in which the JSE owns a minority stake. Over US$10 billion of private share and debt instruments are digitally managed on Globacap’s platform for over 80 companies and 4,300 investors.

“JPP, a key component of the JSE’s revenue diversification and growth strategy, is an online match-making platform that connects issuers seeking to raise equity or debt capital with investors that are looking for companies to invest in,” says Sam Mokorosi, JSE’s head of originations and deals.

Private placements are a different form of capital raising that enable unlisted companies to raise equity or debt funding to pre-selected investors and institutions rather than going the traditional route of raising capital on a public market like a stock exchange. In other words, private placements are an alternative to an initial public offering (IPO) for a company looking to raise capital in an open market to expand its operations.

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“The launch of JPP demonstrates the JSE’s commitment to taking the lead in South Africa by advancing innovation in capital raising for unlisted companies. With this platform, the JSE aims to assist in narrowing the funding gap of between R86 billion to R346 billion that is required by Medium Enterprises to expand their footprint,” says Mokorosi.

Professional and institutional investors have indicated that they are scouting for opportunities across a wide range of industries spanning mining, commercial farming, property, infrastructure, and technology. Additionally, venture capital investors have appetite for tech firms in the early stages of development. There is also asset-backed debt funders suited for SMEs that want to purchase office or yellow equipment such as tractors and bulldozers.

“Lenders on the platform are also interested in providing invoice financing to companies that are unable to raise credit from commercial banks due to lack of trading history but can use unpaid invoices as collateral. Lenders have also shown interest in offering short-term loans to companies that have tenders but lack the working capital to execute or fulfil those contracts,” Mokorosi explains.

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​The platform will be upgraded later this year to assist investors to exit their positions from the companies they are invested in.

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Related Topics:

SMMEsEntrepreneurship

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