Orion Minerals has demonstrated a pioneering approach to capital raising that could redefine how South African listed companies access capital. By successfully implementing an Australian-style Share Purchase Plan (SPP), the company has challenged the traditional, often exclusive, fundraising methods prevalent on the JSE.

The company’s recent capital raise, which comprised a R91 million placement to sophisticated investors followed by a R44 million SPP open to all eligible shareholders, showcased the effectiveness of this dual-pronged strategy. While the placement catered to institutional investors, the SPP ensured that retail investors were afforded a fair opportunity to also participate in the company’s growth.

This approach stands in stark contrast to the typical South African “accelerated bookbuild,” which generally excludes retail investors. By granting all eligible shareholders the chance to participate in the SPP, Orion has fostered a more inclusive and democratic approach to capital raising. This is particularly significant for South Africa, where a growing retail investor base is crucial for market depth, liquidity and the overall vibrancy of the public markets.

Orion’s novel collaboration with Utshalo to facilitate widespread shareholder participation also played a role in the success of the SPP. By providing accessible information – podcasts, webinars, direct emails and 7-day a week responsiveness – and a user-friendly investment platform, Orion ensured that retail investors were able to make informed investment decisions and apply to participate in the SPP.

The implications of Orion’s success extend beyond the company itself. By demonstrating the viability and effectiveness of the SPP model, Orion has set a precedent for other South African listed companies seeking to raise capital. This approach can be adopted across all sectors to create a more inclusive and dynamic capital market.

Regulatory changes are likely unnecessary to realize the potential of the SPP model and Orion’s experience highlights the positive impact that this innovative approach can have on both companies and investors.

By embracing the SPP model, South Africa can foster a more vibrant and accessible capital market, ultimately helping to drive economic growth and creating shared value for all stakeholders.

To get more information on why Utshalo exists, how it all works and how the company helped Orion Minerals, listen to this episode of Ghost Stories featuring Utshalo founder Paul Miller: