UK companies are urged to consider investing in the Johannesburg Stock Exchange (JSE) as British pension funds show a declining interest in domestic equities. Valdene Reddy, the director of capital markets at JSE, emphasizes the importance for FTSE companies to explore alternative avenues for funding and liquidity.
In the late 1990s, UK pension funds heavily invested in British stocks, with up to 53% of their assets allocated domestically. However, recent data indicates a significant decline, with only 4.4% of pension fund assets now in listed UK companies. This shift highlights the need for British companies to seek additional funding sources.
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While efforts are being made to reverse this trend, the cautious investment approach of British pension funds remains a challenge. Dual listings offer a viable solution for British companies looking to access new funding streams while maintaining the benefits of a UK listing.
Historically, dual listings involved complex processes and regulatory hurdles, leading to delays in capital access. However, recent advancements have streamlined the dual listing process, making it more efficient and accessible for companies seeking international expansion.
Companies listed on reputable exchanges can now benefit from a faster listing process, enabling them to tap into new markets swiftly. The JSE, Africa’s largest exchange, aligns its listing rules with international standards, facilitating a seamless dual listing experience for UK companies.
One of the key advantages of a dual listing is the diversification of the investor base, particularly attracting institutional investors seeking exposure to FTSE companies. By listing on the JSE, companies can access a pool of institutional investors in South Africa, enhancing liquidity and capital inflows.
Several global majors, including Prosus, Anglo American, and BHP Group, have successfully leveraged dual listings on the JSE to expand their investor base and boost liquidity. Sirius Real Estate, for instance, experienced significant growth following its dual listing, attracting a broader range of investors and enhancing liquidity.
For foreign investors, FTSE companies present attractive investment opportunities, enabling them to gain exposure to well-established companies with strong governance structures. The ability to diversify portfolios, access enhanced liquidity, and benefit from robust reporting standards make FTSE-listed companies appealing to foreign investors.
In conclusion, the evolving landscape of pension fund investments in the UK underscores the importance of exploring alternative funding avenues for British companies. Dual listings on exchanges like the JSE offer a strategic solution for companies seeking to expand their investor base, access new funding sources, and enhance liquidity in foreign markets.
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