ZAR X lists TWK Investments

Etienne Nel, co-founder and CEO at ZAR X.

New exchange’s third listing gives investors broader access to burgeoning asset class.

ZAR X, South Africa’s first additional stock exchange in almost 60 years, will be listing TWK Investments Ltd, a 77 year old agribusiness based in Mpumalanga, on 12 June 2017.

TWK Investments Ltd (TWK) will be ZAR X’s third listing since the exchange commenced trading in February 2017 and will be one of the pillars of the exchange’s planned agricultural index.

“TWK is the first of a series of listings we will be announcing in the next several weeks,” says ZAR X co-founder and CEO, Etienne Nel. “The other listings will cover a range of different industry sectors, but TWK is significant for us in that it joins Senwes and SenwesBel, our first issuers, in demonstrating the value of agriculture as an asset class.

“The former agricultural co-ops that have transformed themselves into thriving commercial entities driving tangible value for their shareholders are run by innovative people. They’ve adapted to environmental, social, and economic challenges to become the driving force behind the development of local infrastructure, job creation in remote, rural areas, and the nation’s food security. They’ve been operating as successful businesses for decades.

“ZAR X’s focus is on broadening financial inclusion, giving every South African a stake in the success of business. Via the agri businesses that we list, we’re giving ordinary citizens access to solid companies that have proved their own sustainability and also make a direct contribution to the sustainability of the country. By buying their shares, even small investors can have a positive impact on food security in South Africa.

“Investing in agricultural shares creates a self-perpetuating cycle of socio-economic benefits.”

TWK grew out of the Piet Retief Wattle Growers and Timber Association, which founded a co-operative in 1940. Although its initial focus was on marketing the timber and related products of its members, it rapidly expanded its focus up and downstream in the timber industry and into other areas of agriculture. Its divisions now include timber, grain, trade and mechanisation, financial services, and motors and tyres.

The company’s physical assets include fertilizer blending plants, trade outlets, maize and animal feed mills, two grain silo complexes, plantation farms, a wood chipping plant, a treated timber plant, lumber and mining timber sawmills, charcoal production facilities, a forestry seedling nursery, fuel service stations, and vehicle dealerships.

Its product and service offering includes timber related products, timber marketing, fertilizer and general farming requisites, branded maize meal and animal feeds, credit facilities, insurance products, vehicles and related products .

The company has a market cap of approximately R450 million and an existing shareholder base of 707.

“One of TWK’s strategic objectives is to be the investment of choice,” says TWK CEO, André Myburgh. “We restructured the organisation in 2014 in order to create a business platform that would enable existing shareholders to enhance and unlock value in the short to mid term through the widening of the shareholding base of the group and providing shareholders with a more liquid investment.

“We looked for a share trading value proposition that was cost effective, risk free, reduced the complexities associated with listing, and enabled real time settlement of trades. The stock exchange that could offer us everything we wanted was ZAR X.

“Also, TWK’s business model and operations have a number of levers that mitigate risk and challenges. Our shares offer good value, trading at a material discount against the net asset value. Listing with an innovator like ZAR X enhances the visibility and profile of our offering and broadens access to it. By giving people outside of our existing shareholder base an opportunity to invest in the agriculture value chain, the listing increases the liquidity of our shares.”