These have been through a filter of sponsoring brokers and merchant bankers who say they turn away many more than they process. Much of the growing appetite for new listings emanates from the small and emerging company funds which see their coffers growing monthly as investors increasingly turn to them in pursuit of higher returns. New listings appear to offer higher potential growth than the blue chip shares which have not performed well over the past few years. From the companies' side, the market has until recently been strong and a listing can be cheaper than raising debt in a high interest-rate climate. The paper can be used for acquisitions or to lock in staff members at a time when skills are scarce.
Listings also offer an ideal way of bringing in empowerment partners.
With the start of the sometimes volatile trading month of October, some hesitancy is being picked up in the market. No one has pulled out but some companies say they will wait until after October to see if a downturn materialises. Investec's Norbert Sasse says the main risk for companies at this time is that their share price may fall. The appetite for new listings has been pushing up oversubscription levels because public offers tend to be small when compared to private placements, which means there is a lot of money chasing a limited amount of shares. Computer Configurations' public offering of 5-million shares, for example, was 58 times oversubscribed while the public asked for 75 times more shares than sweetmaker Afriband was dishing out.