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Benefits of listing a company on the JSE
Listing is the process of taking a privately-owned organisation and making the transition to a publicly-owned entity whose shares can be traded on a stock exchange, in South Africa that is JSE Ltd. As it was mentioned previously, the JSE is the only shares market in the country.
The ability to have its shares traded on a stock exchange is central to an organisation's decision to list. The fundamental role of the JSE is to bring together in one market place providers of capital and organisations that require capital. The JSE undertakes this role in South Africa and as such, acts as a hub at the centre of the South African economy. Providers of capital earn a return on their investments through dividends and capital growth, thereby increasing the overall wealth of the nation, while the organisations in which they invest provide jobs and drive the economic development of the country.
The Africa’s oldest stock exchange – JSE that is, has been listing companies, trusts and other products for more than 115 years, so the benefits of this path are well known to the market. These benefits include the following:
- Capital growth – listing provides opportunities to both listing company and an investor. The listed entity finds an opportunity to raise primary capital to fund acquisitions and/or organic growth in the market. On the other hand, investors grow their savings through share price fluctuations as well as capital income in the form of dividends.
- Elevation of corporate profile – listing generally raises your organisation’s public profile with customers, suppliers, investors and the media. Listed entities usually gets to be covered in analyst reports and may be included in an index.
- Institutional investment – public listing means your organisation will find it easier to attract institutional (other companies wishing to invest your company –means in itself means availability of both capital and expertise) and professional investors.
- Improved valuation – being listed generates an independent valuation of your organization by the market.
- Trading platform of issued shares – the JSE provides an ideal trading platform of your shares, and also gives shareholders the opportunity to realise the value of their holdings, which in turn can help broaden your shareholder base.
- Exit strategy for early stage investors – listing provides a mechanism for founders of a company, family interests or early stage investors to exit their investment.
- Alignment of employee/management interests – the process of remunerating your employees, executives and directors with shares is simplified, making it easier to align the interests of your employees with the goals of the organisation.
- Reassurance of customers and suppliers – organisations listed on the JSE generally find that the perception of their financial and business strength is improved.
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