Over almost two decades, the JSE has made several attempts at creating an alternative market for smaller companies and new ventures. These have included the development capital market, the venture capital market and others but none met expectations. The latest of these, the AltX market, seems to be different.

It has quickly become an effective platform for small companies to attain public listings. In many cases their shares trade in a liquid market and they raise new equity capital easily when needed.

The equities bull market has greatly helped this market to get established quickly. Since April 2006, the AltX index has risen by more than 280%.

The number of companies listed has grown to 32, and has been close to 40. The total market capitalisation of its listings at the end of May this year was more than R12bn.

Some of these valuations were small, such as the R25m for All Joy, a food company, or R18m for Wellco, a supplier of vitamins and wellness products, but some have much more substantial market caps.

The larger ones include telecom provider Datapro (R2,12bn), engineering and design group Esor (R1,35bn) and the financial services company Blue Financial (R1,23bn).

This market could not have grown at this pace in the bearish conditions of five years ago. Most investors were ignoring small companies and many of these operations were rushing for the exit door.

But other factors have also contributed to the success of the AltX in the past 14 months. Listing criteria are stricter but perhaps more realistic than those applied to comparable sectors in the past.

Better-quality companies, often with longer track records, appear to be coming to the market, which in turn partly reflects an expanding domestic economy that creates favourable conditions for small companies and entrepreneurs.

The JSE has itself been proactive in identifying good candidates for the market, and there is a pipeline of more potential listings to come.

Share ratings in the sectors have risen sharply, as the bullish trend in smaller stocks has continued to attract investors' attention. Some AltX stocks now trade on historical p:e ratings of 20 or more.

Though some of the valuations in this market may be high and even becoming stretched, they are nowhere near as demanding as those applied to many small companies in the listings boom of 1990-2000. Risks may have risen, but they are relatively contained.