The Bond Exchange of South Africa Limited (BESA) is pleased to confirm that it has secured all the necessary approvals in support of its recently announced Rights Issue. This constitutes the second phase of BESA’s development strategy, and follows the Exchange’s demutualisation in 2007.
Garth Greubel, CEO: BESA, explains, “We are tremendously excited by what the fresh capital injection and new partners will deliver for our business. The effect of this transaction is to significantly strengthen our shareholder and capital base, with certain strategic partners also being represented on the board, whilst maintaining our commitment to the bond market and existing shareholders.”
Our underwriting partners include New Zealand Exchange Limited and other financial institutions, including local banks, who collectively secure the transaction.
“Our strategic partners will offer fresh commercial input and we are looking forward to the contribution they will make to BESA.” adds Greubel.
After the Rights Issue at least 30% of BESA’s equity will be held by strategic partners, providing valuable support in order to execute BESA’s vision of building better markets. Formalities relating to the transaction will be concluded at BESA’s Annual General Meeting towards the end of September.
One of the key strategic projects which will contribute significantly in driving BESA’s growth is BondClear Limited, a new central counterparty clearing house being established by BESA.
“We are optimistic about BondClear, in which NASDAQ OMX is a direct shareholder. NASDAQ OMX is one of the world’s largest exchange companies with trading technology capabilities across six continents. The BondClear venture will focus on providing clearing and central counterparty (CCP) services to South African financial markets, initially for interest-rate derivatives listed on our Exchange.”
Shareholder and market support for the Rights Issue, the BondClear project and other strategic initiatives that BESA is undertaking have been overwhelmingly positive. Management has already received irrevocable commitments in writing from shareholders, in excess of the necessary requirements, approving the capitalisation transaction.
All these initiatives are being undertaken against the backdrop of strong market performance in BESA’s core bonds franchise. Annual bond market turnover topped R13.8 trillion in calendar 2007. During 2008 bond turnover has surged, with a record monthly figure of R1.486 trillion reported in February. This has since been consistently exceeded from May through to August when turnover reached a new record R1.956 trillion for the month. It is anticipated that turnover will top R17 trillion for 2008, representing an annualised velocity of 28 times market cap.
“BESA now faces one of the most exciting and ambitious phases of our development as an Exchange. Post the AGM, our new capital will leave us well positioned to drive value through our existing core business and extend our set of products and services to financial market participants, as well as accelerating financial market infrastructure development in South Africa. We are excited by what the future holds for us as a business and the positive contribution it will make towards strengthening competition in South African financial markets.” concludes Greubel.
