Dual Listings and Delistings: Why SA Companies Pack for London
https://themoneymaze.co.za/episodes/dual-listings-delistings-why-sa-companies-pack-for-london/
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0:00 Welcome back to the money minister podcast for South African retail investors who want to stop feeling like they're drowning in jargon and start navigating the market like someone who actually knows what they're doing on your host Jay. And today we're tackling a question that pops up a lot. Why do some companies listing to places? Why do others pack their bags and leave the JC entirely and white as London look like the sentence city of stock exchanges for South African firms. So grab your virtual passport cause in this episode we going global.
0:33 Let's dive in. Let's start with dual listing. While the dual listing is when a company lists its shares on more than one Stock Exchange. For example, Anglo American is listed on the JC and the London Stock Exchange. Same company, same business, but you can buy its shares into different places. So why do they do this? Well, it's about access to exchanges mean access to more investors and more liquidity. It's like selling Borovo scrolls at both rugby stadium and the cricket stadium.
1:04 More foot traffic, more sales, same voice, 4 JSE companies. London is like that boogie cousin who lives overseas. Listing their gives access to a bigger pool of global institutional investors, more analyst coverage and sometimes a stronger currency market for raising capital. So why is Jay-Z losing listings? Well, here's the hard truth. The JSC is like a nightclub that used to be packed in 2005 but now it's a ghost town. Was one lonely bouncer scrolling Instagram? In the last 20 years we've gone from over 600 listed companies to about 280 today.
1:41 So the question is why? Ohh, low liquidity. There just aren't enough buyers and sellers. If you want to raise big capital, good luck finding it on the JC alone. Costs while maintaining a listing isn't free. You've got regulatory requirements, reporting standards and a mountain of compliance. And then you've got a valuation gap. Many local companies believe the Jaisi undervalues them compared to global peers.
2:06 It's like selling your Golf GTI in a small dorpie when no one has cash versus Johannesburg where everyone knows what it's worth. So why do companies pack their bags for London? The London Stock Exchange is a popular second home for South African giants. Think Anglo, Sassle, PHP and previously Old Mutual before the big unbundling drama. Reasons they pack for London.
2:30 Access to deeper capital pools. Global investors wrote down pounds like Jobuk uncle's throw around Brandy at a Bry currency strength, rising capital in pounds or USD beat South African when you're funding international operations. And then there's global visibility. If you want to attract big institutional investors. London and New York Stock exchanges are like the center of stock markets. Everyone who's anyone is there.
2:56 Now let's look at delistings. Why companies say cheers to the JC. Well, you've seen the headlines. Companies delisting left right and centre question is why ohh buyouts private equity loves a good buy out companies like Clover said thanks Jazz but we going private low valuation model if there's a share price that's trading lower than the CEO's blood pressure after load shedding delisting starts to look really sexy Edmund fatigue. So as said earlier the compliance burden is heavy. If you're investor base is small and you're constantly doing roadshows with a handful of people, why would you bother ending costs versus benefit?
3:35 If you're listing fees and audit costs or chewing more cash than you're raising, you're better off chilling in the private space. So let's do a bit of an example. No J conversation is complete without Naspers and process Naspers listed process in Amsterdam to unlock value and reduce the jazz waiting issue. Did it work Well, sort of, but it shows how complex 2 listings can get.
4:01 So the risks for retail investors, before you start thinking you're almost chased all these dual listed stocks gone down, take a chill pulp. Just remember you've got foreign exchange risks. Buying a London listed shares, Well now you paying in pounds no longer rands. You've got liquidity differences. Sometimes the Jaish E version trades at a slight discount or premium compared to the London Stock Exchange version.
4:26 Then there is costs. If you trade on a platform such as Easy Equities, check those forex and transaction fees that will make you cry like that time Woolies increased rotisserie chicken prices, so time for your stock fell started back off stock lingo for this episode 21 Your CHEAT SHEET. Dual listing is the same company listed on 2 exchanges for better capital access deal listing is company saying cheers to the exchange. Usually due to low cost, low valuation or buyouts. London migration.
4:58 It's about bigger investors, stronger currency and the global exposure. So while my jokes may be more awkward than Eskom's load shedding schedules used to be, remember this is not financial advice. Please do your own research and speak to a licensed advisor. Until next time, I'll catch you again on the money mice.