Johannesburg Stock Exchange (JSE) Limited has reached an agreement to purchase a major stake in Link Market Services South Africa Ltd (Link SA) – the second-largest share registry business in South Africa – for a cash amount of R224.5 million.
Subject to all required approvals, JSE Limited will acquire a 74.85 percent shareholding in the proprietary firm from Link Market Services Limited, a company incorporated in Australia. Link SA’s Black Economic Empowerment (BEE) shareholder will retain the remaining 25.15 percent.
The acquisition, expected to be finalized by the end of the year, will see Link SA being merged into the JSE Limited structure and operated independently under a newly formed business stream. But the company will retain its “level 2 BEE rating” after the transaction, while Chief Executive Iqbal Haniff will remain as CEO, JSE said in a press release issued yesterday.
The bourse further revealed that the proposed acquisition comes after many engagements with the JSE’s listed companies’ which have expressed a desire to drive synergies and consolidate how they service their shareholders through a one-stop-shop.
“We are continuously having conversations with our clients on how we can better meet their needs and add value,” JSE CEO, Nicky Newton-King said. “The JSE is well placed to engage in order to fill a crucial gap in the market and to collaborate with our listed companies to educate and look after their shareholders end-to-end.”
Essentially, the acquisition of Link SA (which has 6 of the top 40 listed companies as clients) will enable the JSE to diversify revenue. According to the JSE, the proposed transaction is revenue accretive with an expected contribution of up to 6 percent of Group revenue, while exceeding the Group’s return on investment hurdles.
Through Link SA, the exchange can also “extend the services it already offers listed companies which includes training, investor relations support and listed company annual, and interim results presentations hosting and meeting support,” the statement read.
The bourse intends to introduce end-to-end products and services to JSE listed companies, making it easier for them to communicate and understand their shareholder base. These new services include shareholder register maintenance, corporate actions, shareholder analytics, managing BEE share schemes, electronic communication and voting, and training and educating shareholders.
“We look forward to this transaction strengthening our relationships with our listed clients and helping to build a stronger and more engaged shareholder base for our issuers, which is so important for real inclusive growth in our country.” Nicky Newton-King added.
JSE Limited is the operator of the Johannesburg Stock Exchange (JSE), Africa’s oldest and largest, multi-asset class stock exchange. Based in South Africa, JSE has operated as a marketplace for the trading of financial products for 132 years.
The bourse connects buyers and sellers in equity, derivative, and debt markets and is one of the top 20 exchanges in the world in terms of market capitalization. It is a member of the World Federation of Exchanges (WFE) while holding the chairmanship of the Association of Futures Markets (AFM).
Meanwhile, the Link Market Services group delivers integrated capital market, registry, and related services to international companies listed on multiple exchanges. The firm manages and maintains the registers of more than 2,000 issuers, representing more than 30 million shareholders.
In Australia and New Zealand alone, the group administers over 7 million shareholders on the registers of more than 1800 securities, including many of the region’s largest companies, together with unit registers of more than 250 funds managed by some of the world’s largest investment institutions.