It’s been quite a week for the Cape Town Stock Exchange (CTSE), welcoming its ninth listing. Joining BizNews is the CTSE’s chief executive Eugene Booysen and Renier de Wit of Gaia Fund Managers. When asked why he chose the CTSE and not the JSE, De Wit remarked that the team and exchange platform – which he described as innovative – make the Cape Town Stock Exchange the place to be. – Jarryd Neves
Eugene Booysen on the Cape Town Stock Exchange
The Western Cape Government, City of Cape Town and Wesgro – all the agencies – have been massively accommodating [and] made us feel hugely welcome in the Mother City. Further to that, judging by the number of requests and invitations we’ve had, businesses are keen to give us a leg up.
Everyone’s keen to try to come onboard. I think they’ve embraced the idea of having a stock exchange and a debt exchange in the Mother City. We are going to deliver on those promises and provide them with an exchange that allows us to grow these businesses in the future.
On the debt exchange and debt listing
This week, we listed our first formal listed debt. We launched Capital Harvest, the issue is Capital One. That was an agricultural listing and it’s one of the mechanisms to replace the underlying Land Bank and some of the failures at the Land Bank around co-operative finance.
We think it is one of many in the near future and are looking to bear down our listed debt offering. We got our open market licence at the end of August, and this has allowed us to go out and prosecute the business opportunity in the space. We have a platform that makes it really simple and easy for underlying issues and also for underlying investors to participate on the platform.
Renier de Wit on choosing the CTSE
We have been working with Eugene and the team at Cape Town Stock Exchange for more than a year and a half. We did our first listing with them – Gaia Renewables 1 – in October last year. I must say, if you’re looking for an exchange platform and a team of people that are open to innovative ideas, change the static, old way in which things were done and able to look at different ways of doing things,[then] the Cape Town Stock Exchange is the place to be and it is great to have them in the Mother City as well.
On demand and supply
Our focus specifically, at this stage, is to provide our investors with a platform, a listed preference share in this case. It is specifically focused on pension funds and collective investment schemes and also high-net-worth individuals that can invest in the stock.
It doesn’t need to be traded on a daily basis. We are able to forecast what the prices are and, over time, it will grow. We’re not stopping here. We are not stopping at the first preference share. There are going to be many more of these. Over time, we will have a platform that trades more regularly and others will hold these shares for a long period of time.
On the underlying investment
Gaia Fibonacci Fibre REIT 1 is dedicated to investing in fibre networks. That is the infrastructure that basically carries the fibre to the home. We’re talking [right now] from home. We know that without this fibre, we wouldn’t be able to communicate. The world has changed so much with Covid-19 and all of the changes over the last two years. If you haven’t got good connectivity at home, at school or at your office, you’re really going to be left behind.
What we are doing is investing specifically in the networks, new areas, new residential estates that we are unlocking here. We typically buy a network as soon as it’s established and has a level of uptake we are comfortable with.
On the investment case and the yields
Gaia’s main focus is on a number of areas. Firstly, we are an ESG investor. We are investors that look to create a positive and sustainable impact on South Africa and its people. That is our investment thesis; that we have a lens in terms of all the investments we make. Secondly, we are a strong team with experience that can act as the active asset managers for our investors.
We then provide diversified opportunities, alternative assets that do not correlate with the market in a normal way. They provide some inflation protection. At the end of the day, it is all about having a tax-efficient, [cohesive] structure, at competitive fees. That is our main thesis of what we want to do with this investment.
Our investors [are] investing in preference shares. We will declare dividends to our investors; it’s obviously a tax-efficient structure, so there is no tax within the REIT. In that way, we are enhancing our yields and our target is to return inflation plus 10% on our investments.
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