Investor marketing agency Ince has partnered with investment firm Miller Capital Investments founder Paul Miller to launch financial service Utshalo, which is designed to address challenges faced by South Africa's public markets.

The collaborative effort aims to reconnect non-institutional investors with companies seeking to raise capital in South Africa’s public markets.

In recent decades, changes in the financial services industry and the decline in South Africa's public markets have impacted on companies of all sizes. This has especially hindered the ability of companies outside the top 100 to access essential capital for growth.

Stockbroking has fundamentally changed, with new capital raisings becoming increasingly rare, liquidity drying up and a delisting trend continuing to accelerate.

“We now have wealth managers, who would far prefer their clients to put their money into constructed or model portfolios that effectively mimic the same portfolios that you'd get from any of the ten large financial services institutions.

“Or alternatively, they'd like you to go to a low-cost, low-service secondary trade-only platform. What seems to have fallen through the cracks between the two is what has happened to the role that stockbrokers used to fulfil between companies and direct investors,” Miller explained in a briefing to launch Utshalo on November 16.

Utshalo seeks to address these critical issues by providing a platform that will directly present initial public offerings, offers, placements and transactions, such as accelerated bookbuilds and off-market settled block trades, to non-institutional investors.

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 would, in turn, help foster a resurgence of the vibrancy of South Africa's public markets.

"We recognise the pressing need to recreate a direct relationship between non-institutional investors, especially retail stockbroking account holders, and companies seeking growth capital, or issuers of other listed financial products, in the South African market.

“Utshalo aims to be a catalyst to revitalise our public markets, offering a platform that serves both investors and companies, irrespective of size, to transact directly with each other in a regulatory-compliant, low-friction, digital way,” Miller said.

Utshalo is a fintech company incubated by Ince, which acts for issuers by offering or placing shares in the primary, or other sellers in the secondary market. Miller said that it has the largest Protection of Personal Information Act-compliant database of investors in South Africa and a full suite of digital marketing tools.

Utshalo will handle all the administration for an issuer digitally, such as submitting application forms to e-Fica and direct settlement of dematerialised stockbroking in marketing accounts.

“We aim to encourage participation and access to primary capital raising and liquidity generally, by connecting issuers and sellers with direct investors in a modern, regulatory-compliant, digital, low-friction way, and thereby address the declining role of South African public markets. This is all paid for by the issuer, not the investor,” Miller explained.

Utshalo will provide primary capital raising, including public offers and private placements, and will also deal in exchange-traded notes and actively managed certificates.