Last December, the private placement arm of the Johannesburg Stock Exchange (JSE) was granted a financial services provider license, giving it the green light to help unlisted companies and entrepreneurs raise debt and capital on its digital and automated market platform.
Since obtaining the financial services provider license, 20 institutional investors with approximately N$10 billion to deploy have registered on the electronic platform and are seeking to fund ventures and infrastructure projects mobilizing a debt of N$1 million and above, and equity of N$20 million and above. .
In South Africa, private placements are traditionally done manually, but JSE Private Placements (JPP) has automated the process to make it more efficient and transparent.
JPP’s services are offered in partnership with Globacap, a UK-based capital markets technology company in which JSE holds a minority stake.
Over $10 billion in private equity and debt instruments are managed digitally on Globacap’s platform for over 80 companies and 4,300 investors.
“JPP, a key part of the JSE’s revenue growth and diversification strategy, is an online matchmaking platform that connects issuers seeking to raise equity or debt capital with investors looking for companies to invest in,” says Sam Mokorosi, JSE. responsible for originations and deals.
Private placements are another form of capital raising that allows unlisted companies to raise equity or debt from pre-screened 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 for a company looking to raise capital on an open market to expand its business.
“The launch of JPP demonstrates JSE’s commitment to taking the lead in South Africa in advancing innovation in raising capital for private companies.
With this platform, the JSE aims to help bridge the financing gap of between N$86 billion and N$346 billion that medium-sized enterprises need to expand their footprint,” says Mokorosi.
Professional and institutional investors said they were looking for opportunities in a wide range of industries covering mining, commercial agriculture, real estate, infrastructure and technology.
Additionally, venture capitalists have an appetite for technology companies in the early stages of development.
There are also asset-backed lenders suitable for small and medium-sized businesses that want to purchase office or yellow equipment such as tractors and bulldozers.
“The platform’s lenders are also interested in financing invoices to companies that are unable to obtain credit from commercial banks due to a lack of business history, but can use invoices unpaid as collateral. Lenders have also shown interest in offering short-term loans to businesses that have tenders but lack the working capital to execute or fulfill those contracts,” says Mokorosi.
The platform will be updated later this year to help investors exit positions in the companies they have invested in.
– IOL News