Since its launch in October 2003, AltX, the JSE Securities Exchange's alternative market for smaller companies, has mustered three recruits to its ranks. A small start, yet it is AltX manager Noah Greenhill's firm conviction that great enterprises grow from small beginnings.
"It takes time to build any new business," says Greenhill. "We also believe small companies need a route to market now. The pipeline of potential listings looks incredible. But the process can take six months to two years."
AltX will, to an extent, take the place of the JSE's 15-year-old - and not too successful - venture capital (VC) and development capital (DC) markets, which are to be terminated in July this year. Two of AltX's members, soap manufacturer Beige and small mortgage bond financier ABC Cash Plus, are migrants from the VC board. The third, insurance-sector service provider Insurance Outsourcing Managers, is a former main-board company.
This does not imply that all 35 VC and DC companies or even those on the main board would be welcome, says Greenhill. AltX wants small and medium-sized companies of good quality with high growth potential. "Advisers will have to be highly selective in what they put forward for AltX listings."
On the question of regulations, Greenhill says: "We have tried to strike a happy medium." But all companies seeking a listing are subject to close scrutiny by the AltX advisory committee. All directors must attend an induction programme and companies must employ an adviser designated by AltX.
The exchange's listing requirements are less stringent, though. No profit history is required and the minimum share capital is R2m, compared with R25m on the main board. Costs are also lower, AltX fees being fixed at R20 000/year. Main board companies pay up to R121 700/year.
