African Rainbow buys 20% stake in planned A2X exchange

29 March 2017

29 March 2017:

Patrice Motsepe’s African Rainbow Capital (ARC) is getting behind aspirant stock exchange A2X Markets through the acquisition of a 20% share.

The transaction allowed ARC to increase its share to 25%, conditional upon A2X securing its exchange licence, the companies said on Tuesday.

ARC is a fully black-owned and controlled investment company with stakes in various financial services businesses.

A2X hoped to secure its stock exchange licence in the next month or two, said CEO Kevin Brady. It would be operational by the end of 2017 and was in talks with 10 to 15 "quality issuers", Brady said.

A2X was targeting the 50 to 65 largest and most liquid stocks on the JSE, to which it would provide a platform for secondary listings.

A2X was actively trying to break the JSE’s "long-standing monopoly" and would introduce primary listings in time, he said.

Competition would improve the liquidity and quality of the market via better price formation, Brady said.

He said ARC’s investment imparted a massive vote of confidence in what A2X was trying to do.

Motsepe said: "We are proud to be able to bring broad-based black-controlled capital to an initiative that will bring competition in an industry traditionally dominated by one player."

"Competition drives market efficiencies and this benefits all users, including individual investors and pensioners."

ARC’s "industry relationships" would unlock significant opportunities for A2X, said ARC co-CEO and former Sanlam chief Johan van Zyl. "We are excited to play a role in building an alternative stock exchange in SA with strong BEE [black economic empowerment] credentials."

A2X will become the third new stock exchange to launch in 2017 in 80 years, alongside ZAR X and 4 Africa Exchange.