For private companies, attracting financing is paramount to overcoming economic hurdles and fostering sustainable development. Limited access to capital often impedes their ability to invest in technology, infrastructure and skilled personnel. Securing financing enables these enterprises to expand operations, enhance productivity and remain competitive in the global market. Additionally, it facilitates the creation of employment opportunities, contributing to poverty alleviation and socio-economic growth.

Financial infusion empowers businesses to navigate market fluctuations, invest in innovation and address critical challenges such as inadequate infrastructure and limited resources. Furthermore, attracting financing can bolster the resilience of smaller African companies, enabling them to weather economic uncertainties and crises. Access to capital not only fuels individual business growth but also stimulates overall economic progress, fostering a vibrant entrepreneurial ecosystem that can drive sustainable development.

JSE Private Placements (JPP), a company within the JSE Group, was created to cater to this vital need for capital raising and investing. Since its formation some three years ago it has onboarded 41 deals – raising more than R7.7 billion – and facilitated investors with in excess of R20 billion of capital to deploy.

JPP is now embarking on a drive to scale up its investment initiatives, especially on the continent. ‘The African continent’s private market is expanding at an exponential rate, despite the present global recession and geopolitical concerns,’ says René Moodley, JPP’s Head of IT and Operations.

‘On the raising capital side, be it debt or equity, we are seeing a diverse spectrum of projects with a trend of larger ticket sizes per request, with the majority in infrastructure and business expansion. We have observed that investors have prioritised energy, transformation and fintech initiatives. In addition, international funders or large institutions account for a sizeable portion of financing in the Southern Africa area.

‘In short, there is no scarcity of projects or donors. The market difficulty revolves around focus and matching relevant deals efficiently. All the aforementioned trends demonstrate the need for a central private marketplace that will act as a catalyst to grow private companies, our country and, ultimately, the continent.’

Moodley says the plans for JPP to expand its services internationally were spurred by its success locally. ‘The case study of South Africa has been tremendously successful since our introduction in 2021, as we discovered a viral-type uptake in our offering. Furthermore, we were able to obtain a better understanding of what organisations require in terms of both investor and capital raising. With this strong base, we are already working to nourish and extend not just our product, but also the chance for private companies in the rest of Africa, the UK and North America to use our fintech solution. We will share some of these prospects in the coming year.’

Moodley says JPP took several factors into consideration when planning its scaling. ‘Private markets are a vast domain with a wealth of fintech optimisation opportunities. As a result, the primary issues we looked at included synchronising regional priorities, continuing our R&D, and producing a win-win-win environment for JPP, its aggregators – also known as brokers – and other entities seeking to raise funding or invest.

‘Building a healthy, long-term win-win-win market-operating model will necessitate the efforts of more than the JSE. Advisers, bank exchanges, distributors and financial institutions are all examples of aggregators. They would maintain their present expanding business strategy while leveraging JPP as an alternate deal-sourcing mechanism to acquire a larger number of potential yet relevant clients,’ he explains.

Moodley says areas of the JPP platform are currently being prioritised for enhancement based on international user feedback. ‘We are constantly improving the technological stack as we learn and meet the demands of private-market participants. The main objectives are to increase self-sufficiency, reduce client offline/manual effort, and improve the analytics [matching] engine.’

JPP is committed to realise the JSE’s ambition to deliver a digital marketplace for unlisted companies to ‘showcase their businesses and attract funders seamlessly’.

By Patrick Farrell
Image: iStock