On April 10, the company received a notification from the JSE withdrawing the listing approval. The reason cited by the JSE was non-compliance with section 33 of the Company’s Act, which requires the submission of financial statements to the Companies and Intellectual Property Commission (CIPC).
Yesterday, the company received written confirmation from CIPC indicating that Sagarmatha Technologies was, indeed, compliant and had provided the required financial statements.
The JSE now cites a technical point, which has prevented Sagarmatha Technologies from listing tomorrow.
The technicality suggests that Sagarmatha Technologies was non-compliant on the date that the pre-listing statement (PLS) was approved (March 28). The CIPC has confirmed otherwise, stating that at no stage was Sagarmatha Technologies not compliant.
Sagarmatha Technologies confirms that it received indicative commitments for this listing exceeding R4billion, therefore comfortably meeting the minimum listing requirements of the JSE.
However, due to the JSE withdrawal of the listing notice, Sagarmatha Technologies is legally bound not to accept these applications from its committed investors. Sagarmatha Technologies was hopeful it could resolve this issue with the regulator and requested the extension of a new listing date. However, the JSE has requested the company make provision for a fresh listing application.
Consequently, Sagarmatha Technologies will not list tomorrow, April 13.
The Sagarmatha Technologies board is now considering options that include: offers to purchase from international investors for its four largest businesses; and/or listing on the New York Stock Exchange (NYSE) and Hong Kong Exchange as primary; and/or a primary listing on the JSE and a secondary listing and/or a dual listing.
This listing has been the most scrutinised in the history of South Africa, beginning with unprecedented interest in how multi-sided-platform (MSP) technology companies are valued.
This was further fanned by a large-scale disinformation campaign driven mostly by competitor media houses against Independent Media - a company that would have been under the Sagarmatha Technologies umbrella.
It is apparent that there is a general lack of understanding around MSPs in South Africa. Aside from the comments Sagarmatha Technologies was subjected to when it first announced its listing intention, this lack of insight shows in how the JSE’s largest company, Naspers, trades at a substantial discount as compared to the value of its investment of TenCent in China. It is for this reason and the fact that the company is considering a listing on the NYSE, that Sagarmatha Technologies had the foresight to engage one of the world’s top valuation companies, Redwood Valuation Partners, as well as the esteemed faculty of finance of the University of District of Columbia, both technology experts and specifically familiar with MSPs. Redwood Valuation Partners underwent a stringent process to be accredited by the JSE. The valuation received from Redwood Valuation Partners pegged the share price between R37 and R41 a share - and a decision was made to list at a price of R39.62 a share.
Sagarmatha Technologies is no different to companies such as Uber, Amazon, Alibaba, SnapChat, FlipKart, Airbnb, DD Chang - all companies that showed substantial losses but whose values were highly valued by the capital markets in which they were listing.
It is the very reason why Amazon is today worth $700bn even though its ecommerce business is still only marginally profitable after 20 years and that the top eight MSPs in the world, have a combined market cap of $4 trillion.
Sagarmatha Technologies is still of the opinion that it is important for Africa to have its own MSP, so that Africans are able to take control of their own technology and data and ecommerce destiny. Regrettably, that next step forward was cut short today.
As with all pioneering moves, boldness is subject to a lot of analysis, and in this case, also vast misunderstanding. This unfamiliarity, sadly, lent itself to a focus on Independent Media, rather than on the greater picture Sagarmatha Technologies as a whole represents.
It was the intention of the company to benefit more than 3million workers in South Africa, which would have come through the shareholding in Sagarmatha Technologies that included trade unions, civil society organisations, black entrepreneurs, black businesses, employees and academic institutions. This would have made Sagarmatha Technologies the most representative and largest black-owned listing on the JSE.
Additionally, more than 5000 young IT professionals would have had the opportunity to be trained in the area of data science, artificial intelligence, system engineering and other MSP technologies.
Sagarmatha Technologies, with its focus on Africa, still intends to give African investors and African business people and consumers an opportunity to participate in shaping the future African economy. It is also a place for African graduates to hone their skills for the benefit of Africa.
Sagarmatha Technologies would like to extend its sincere thanks and gratitude to all its stakeholders for their support - shareholders, management, the board of directors, employees, legal advisers, TGR Attorneys; sponsor and transaction adviser Vunani Capital; accounting firm BDO; asset managers and financial services group PSG Wealth; as well as the JSE.