MTN's broad-based black economic empowerment scheme, MTN Zakhele, plans to list on the Johannesburg Stock Exchange (JSE) on 5 November.
MTN Zakhele announced its plans earlier this year to list on the JSE's BEE segment and move from an over-the-counter (OTC) trader. The scheme will become the first BEE scheme to list on this segment "subsequent to the amendments made to the JSE listings requirements in respect of BEE Securities in July". Sasol's BEE scheme Inzalo has also announced its intention to join the new JSE platform.
Gradidge-Mahura Investments co-founder, Craig Gradidge, says MTN Zakhele had little choice but to list after the Financial Services Board (FSB) issued a directive last year outlining plans to better regulate unlicensed exchanges in South Africa.
"The FSB has clamped down on OTC platforms and given companies trading on those platforms time to either move to a compliant trading platform, or to ensure the platform they are trading on complies with all the requirements of the Financial Markets Act. MTN Zakhele has opted to move to the JSE BEE board, which is compliant," according to Cradidge.
MTN Zakhele chairperson, Sindi Mabaso-Koyana, says the JSE listing "will provide shareholders with regulatory certainty for trading their MTN Zakhele shares".
MTN Zakhele has a market capitalisation of R9 billion and was established by the telecoms giant in 2010 as a vehicle for previously disadvantaged South Africans to invest in the MTN Group. MTN Zakhele says over 13 million shares valued at more than R1 billion have changed hands since the scheme opened up trade on its OTC share trading platform in November 2013.
The path forward
MTN Zakhele says as of 16 October, its OTC share trading platform will be closed for trade. Registration on the new transaction platform opens on 26 October and the scheme will officially list on the JSE on 5 November.
"There will be a brief disruption in trading prior to listing from 16 October 2015 to 5 November 2015 to enable, among other things, migration of shareholder data," says Mabaso-Koyana.
"All MTN Zakhele ordinary shareholders, whether they have registered previously for the OTC share trading platform or not, will need to be verified, and all shareholders who wish to use the new transaction platform to trade their shares in the JSE environment will need to register on the new transaction platform."
The scheme says that in order to facilitate the MTN Zakhele listing on the JSE, it is necessary to amend the MTN Zakhele memorandum of incorporation to, among other things, make provision for the MTN Zakhele shares to be held in uncertificated form, as the JSE does not permit trading in certificated shares.
"There will be an extraordinary general meeting of MTN Zakhele shareholders on 29 September to approve necessary resolutions as a precursor to being able to list on the JSE."
MTN Zakhele has identified service providers that will provide shareholders registered on the new transaction platform with trading, custody and settlement services.
"Shareholders will need to sign new trading and custody mandates with such service providers should they wish to use the new transaction platform. Shareholders will also be able to use their own service providers to trade their MTN Zakhele shares on the JSE, provided they have been verified."
Mabaso-Koyana says MTN Zakhele has worked closely with the JSE to meet key milestones in order to facilitate a listing on the amended JSE BEE segment.
"The BEE vehicles require certainty about the black ownership of their shares so it has been necessary to modify listings requirements," says Mabaso-Koyana.
"Our shareholders are largely individuals who trade in small volumes, so it was important to continue to facilitate access to trading on the JSE through familiar platforms. Importantly, after the JSE listing, shareholders will continue to be able to submit buy and sell orders through the existing methods, being the MTN Zakhele call centre and the Web site."
Gradidge says most OTC traded schemes are having to find alternatives to meet the FSB's new rules.
"One scheme (Thembeka Capital) decided to unwind and investors received PSG shares. Other schemes are moving to new trading platforms that are being formed at the moment, and that will meet all the requirements of the FMA."
Neither good nor bad news
Gradidge says the JSE move is "neither good nor bad news" for shareholders who have already been trading via the OTC platform and will simply start trading on the JSE going forward.
As of yesterday, MTN Zakhele's share price sat at R102 per share. When the scheme was set up in 2010, shares were offered at R20 a piece. The BEE scheme owns 4% of MTN and Gradidge says its JSE success will be linked to that of the group.
"The key determinant of the value/price of MTN Zakhele will be the MTN share price, and MTN dividends," adds Gradidge.
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