As the ripple effects of the COVID-19 pandemic continue to be felt across private markets, the JSE is seeing phenomenal growth in demand for funding – especially in SA start-ups, SMEs and infrastructure projects. JSE Private Placements (JPP) aims to satisfy that urgent need for private-capital investment by offering services to private entities looking to raise debt or equity through an automated and digitalised online platform.

When JPP was awarded its financial-services provider licence in December 2021, JSE Group CEO Leila Fourie marked it as a ‘high-priority undertaking’ that is both central to the JSE’s growth strategy and a bold response to an evolving market environment. ‘This initiative is an opportunity to stimulate investment into South Africa, contributing to job creation and economic growth,’ she said.

JPP achieves that by connecting private companies and issuers directly to investors, enabling the latter to access a range of deals that meet their investment criteria, while also providing transparency by letting them track previous placements and deals.

‘Part of the genesis of this project was when Business Leadership South Africa and the government came together during 2020’s hard lockdown,’ says Sam Mokorosi, Head of Origination and Deals at the JSE. ‘One of the things that we as the JSE put our hands up for was to help facilitate funding in the infrastructure and SME markets, so that we could get the economy resuscitated after COVID-19. This is us playing our role as Africa’s leading exchange.’

JPP targets listed and unlisted entities, aiming to pair up those private debt and equity issuers with investors (including venture-capital funders).

‘The service is available to SMEs that are looking for R1 million debt and above, or R20 million equity and above,’ he explains. ‘As they come on board, we will ask them to submit the necessary documents – including their historical financials, management profiles, forecasts, market studies and statistics, and so on – and once we’re happy with all that, we will publish their deal on the Private Placements platform.’

That information is shared with pre-qualified investors, who can engage with the material online and communicate digitally with the business that’s looking for investment. ‘The platform even allows them to provide an indication of interest,’ says Mokorosi. ‘Once that indication is provided, the company can then declare interest and, once that is accepted, they can use the platform to acquire the shares. The payment is facilitated through JPP, and the company gets its money while the investor gets their share certificate or loan certificate, depending on whether they have acquired debt or equity.’

JPP’s digital platform draws on Globacap’s market-leading capabilities to simplify, automate and streamline the private-capital raising process. The company, in which the JSE owns a minority stake, manages in excess of $10 billion of private share and debt instruments for more than 80 companies and 4 300 investors around the world.

Mokorosi sees JPP’s digital offering as being the future of private-capital investing. ‘I really do,’ he says. ‘If you compare Africa to more advanced economies, our penetration of private equity and venture capital is still fairly low. By making that part of the market more efficient, we are hoping to attract more capital into that industry.’

That includes international investment capital. ‘There’s a strong appetite for international investors to look at Africa as an investment destination, even in the private markets,’ he says. ‘The JSE has been attracting international investment into those markets for the past 130 years. Our expectation is that, through JPP, we’ll replicate our position of trust across the entire market.’

By Mark van Dijk
Image: Gallo/Getty Images