Open market

The JSE Private Placements platform is a boon for listed and unlisted companies looking to connect with investors

Open market

The mood is improving. Commodity prices for metals and minerals are rebounding post-COVID-19, and the conflict in Ukraine has brought the silver lining of improved investor confidence in SA’s mines. But despite all that, capital is still hard to come by. Institutional investors and fund managers are still cautious about mining projects, and SA’s junior miners (which don’t have the strong balance sheets of their bigger counterparts) traditionally tend to struggle to generate exploration funds internally. As a result, businesses up and down the mining value chain are finding their optimism dampened by frustration at a lack of access to investor funding.

JSE Private Placements (JPP) aims to stimulate investment and satisfy that need for private capital investment by offering services to private entities that are looking to raise debt or equity through an automated and digitalised online platform. JPP connects private companies and issuers directly to investors. Investors have access to a range of deals that meet their investment criteria (with data on previous placements and deals); while the private companies are afforded much-needed access to investor funding.

It’s a win-win for businesses in all industries – and especially in mining, says Sam Mokorosi, Head of Origination and Deals at the JSE. ‘Any mining company would benefit from JPP’s offering,’ he says. ‘And it’s not just miners, it’s anybody who’s involved in the broader mineral beneficiation value chain: processing plants, transporters, logistics companies, consultants… That includes prospecting companies or those in the product-development stage, early-stage miners that are building and expanding on their projects, and even mature mining companies that need to raise additional capital. If they want to enter a shareholder transaction or do a B-BBEE deal, those options are all available to them.’

Crucially, the platform is open to both listed and unlisted entities, and it offers both debt and equity funding. ‘That means a couple of things,’ says Mokorosi. ‘Firstly, that JPP is not just for the big guys. Junior miners might look at the platform and think that, but it’s for everybody. Whether you’re looking for R1 million or R1 billion, we can help you find it.’ Indeed, the platform is open to businesses that are aiming to secure R1 million or more in debt, or ZAR20 million or more in equity.

‘Take a JSE-listed mining company like Orion Minerals, for example. It’s a small-cap [firm], but it’s listed – so while it would be difficult for a business like that to raise equity on JPP, it could certainly raise debt on the platform. An unlisted company, on the other hand, could use the platform to raise both debt and equity.’

The mechanics are simple. The business registers on JPP and submits its bona fides (management profiles, market studies, historical and forecast financials, and so on), and the deal is published on the platform. ‘That information is then sent to pre-qualified investors, who engage with the material online and can then communicate with the company or provide an indication of interest online,’ says Mokorosi. ‘If that interest is accepted, the investor can use the JPP platform to acquire the shares. The payment is processed through JPP, and the company gets its money while the investor gets its loan or share certificate.’

While the JSE’s JPP is open to businesses across industry sectors, mining companies may have the most to gain from its services. ‘There’s a lot of appetite from international investors who are looking at Africa as an investment destination – even in the private markets,’ says Mokorosi. And as hard commodities continue their recovery, that interest in the region’s mining opportunities will surely grow.

By Mark van Dijk
Image: Gallo/Getty Images