Banker Paul Miller has launched Utshalo, a new investment platform targeting non-institutional investors in South Africa, seeking to reconfigure and fill gaps in a market that now strongly favours and is dominated by asset management companies.

A former Nedbank CIB investment banker, Miller has launched Utshalo in partnership with Ince, the South African investor marketing agency. Utshalo will use digital platforms. Investors can go to www.utshalo.co.za.

“The particular target market for investors is mostly non-institutional investors like retail account holders, companies’ trusts, charities and everyone other than the traditional asset managers and insurance companies,” Miller told Business Report by phone yesterday.

Ince described the Utshalo offering as an “innovative financial service designed to address challenges” faced by South Africa's public markets. “This collaborative effort aims to reconnect non-institutional investors with companies seeking to raise capital, on the nation’s public markets,” the company added.

This comes as changes in South Africa’s financial services industry have coincided with a decline in public markets, with a pronounced impact on companies of all sizes. Companies outside the JSE top 100 are having hindered ability “to access essential capital” for growth.

Moreover, “the delisting trend from the JSE continues to accelerate,” feeding into “increasingly rare new capital raisings” while “liquidity is drying” up.

Utshalo aims to address such issues through present opportunities for fresh initial public offerings (IPOs) offers, placements and transactions such as accelerated book builds and off-market settled block trades to non-institutional investors, the two parties said in a statement yesterday.

According to Statista, South Africa’s transaction value in the IPOs market is projected to reach $428.3 million (R8 billion) this year and is expected to grow by 25.85% to a projected total of $539m by the end of next year. The average transaction value in the South Africa IP market amounts to about $85.65 for this year, adds Statista.

“The objective of Utshalo is to facilitate a regulatory-compliant, low-friction way for investors seeking investment and trading opportunities, and for companies looking to raise capital or address the illiquidity of their stock, to transact. This, in turn, helps foster a resurgence of the vibrancy of South Africa's public markets.”

Miller said there was a big gap in the South African market mainly propagated by “the way the SA savings industry has been regulated”. Previously, he explained to Business Report, “individual investors were far more prominent in the stock exchange and they used to be served by companies issuing prospectuses and publishing announcements” in print newspapers.

“None of this is happening anymore and through Utshalo we are trying to recreate that direct link between companies and non-institutional investors but doing it digitally and low friction, with full regulatory compliance. We are filling a gap that has developed,” he explained.

According to the JSE, due to the fast-growing number of non-professional investors, commonly referred to as retail investors, the transfer secretary role is becoming increasingly critical.

This is being driven by online brokerage firms, and investment accounts through financial institutions such as banks, and fractional investing.

Other analysts say there is a quick rebalance of how retail investors in South Africa are behaving. Contrary to commonly-held perceptions that retail customers sell off for a quick profit, experiences with EasyEquities are proving that such investors are holding onto shares for long.

“Our investors hold on to shares in the brands they love. They’re investors, not traders. They’re in it for the long run, which means they’re able to add value to a listed company’s brands well into the future,” noted Purple Group CEO Charles Savage in a recent posting.

BUSINESS REPORT