Would-be new listings faced a wall of negatives in 2001 as investor appetite for risk fell to its lowest level in more than a decade. Low interest rates, too, undermined equity capital's competitiveness and the JSE Securities Exchange saw fit to tighten listing requirements drastically.
Listings dwindled to 11 from 2000's already low 14 and the avalanche of 229 in the 1997-1999 boom. Even 11 listings flattered the reality. No public offers were made; all listings resulted from private placements, restructurings or unbundlings.
Kumba Resources, at R7,4bn the largest listing, was the product of an unbundling from Iscor in November. Three listings emanated from Apex property unit trust's reincarnation into ApexHi property loan stock (PLS) and its subsequent split into A and B units. The PLS sector provided another four listings as issuers took advantage of demand created by falling interest rates .
The equity market's depressed state showed in the single main-board industrial company listing, Astral Foods, and one tiny venture capital listing, Stratcorp. A low level of corporate activity resulted in a 70% fall in equity-funded acquisitions, down to R12,9bn from a R33bn three-year average from 1998 to 2000 and R44bn in 2000.
Perhaps the general ill-health of the listing environment was clearest in the delistings: 85 companies departed from the JSE, bringing the total to 300 over four years. The number of listed companies stood at 542 at year-end, equal to the number in the JSE's 1987 centenary year, and down from 1998's peak of 669.
The biggest loss was the delisting of De Beers in June after the US19bn buyout by DB Investments, controlled by the Oppenheimer family. This not only ended De Beers' 108-year listed history but further reduced investor choice in a depleted mining sector. With three delistings other than De Beers, mining and mining holdings and mining house shares reached a new low of 61 in 2001. This is half the number of 15 years ago; and about 60% of the sector in market capitalisation terms is now foreign-owned.
The JSE bade farewell to another old-timer, Toyota SA, after 37 years following a buy-back of 22% of shares held by minorities. This left Toyota of Japan with a 36% stake and still-listed Wesco with 64%. At a 77% premium to Toyota's pre-bid price, at least the deal did not leave a sour taste in investors' mouths.
This cannot be said of many other delistings resulting from spectacular financial failures in 2000. One of the worst was a 1987 listings boom survivor, medical supplies group Macmed. Amid horror stories of corporate misgovernance, it went belly-up in 2000, owing 16 banks R1bn in SA's biggest insolvency.
Others left the boards less spectacularly but also with disgraced management records . TriDelta Magnets, pub franchiser O'Hagan's, IT groups Infiniti, ITI and MMW, plastic goods manufacturer Plasgroup and food group Nimbus were among many that departed leaving more questions than answers. Stantronic, a typical, acquisition-driven hybrid of the boom period, ended its three-year listing in liquidation. A similar fate befell transport logistics group Roadcorp .
A misconceived 1998 listing, Internet service provider M-Web, departed after chalking up total losses of R628m. Parent group Naspers opted to take out the 12% minority stake in exchange for Naspers shares, in effect valuing M-Web at about 210c/share. A far cry from M-Web's 850c/share high in the euphoric dot-com days, when client numbers counted more than profits.
But 2001's delistings do not tell the full tale of the thinning-out of JSE ranks. The 44 suspended shares must also be taken into account. Though marginally down on 2000's year-end tally of 47, suspended shares now represent 8,5% of all listed companies, up from 7,6% in 2000.
LeisureNet earned infamous pride of place last year on the suspension list. It took interim CEO Peter Flack just over a month to decide that its R1,3bn mountain of debt and offshore commitments was insurmountable. He put the group into liquidation amid the closest scrutiny of corporate misgovernance and poor accounting processes yet seen in SA.
At least the financial writing was clearly on the wall for IT group Siltek, which ended its 32-year listed history in liquidation. Not so at Regal Treasury Bank, whose opaque financial structure had to be investigated by advocate John Myburgh. The collapses of Unifer and Saambou served to increase investor unease .
Listings of parastatals such as Telkom and Eskom hold out some hope, but other companies may have to wait for another boom. If the cycle repeats itself, this may be in about 5 years.