Primary vs Secondary Listing: What investors need to know

Greencoat Renewables, a Europe-based renewable energy infrastructure firm, recently applied for a secondary listing in the JSE’s Alternative Exchange (Altx) to diversify its shareholder base. While the application’s approval is still pending, this does spark curiosity as to why companies are interested in listing in foreign indexes, and just how lucrative it can be. 

To dive into the various types of listings and how they affect investment portfolios, The Money Show’s Stephen Grootes hosted Gary Booysen, Director at Rand Swiss and Hlelo Giyose, Chief Investment Officer and Principal at First Avenue Investment Management, in this episode of Investment School. Brought to you by CFI, an Authorized FSP. 

Listen to the full conversation below: 

Giyose explains that a secondary listing presents an opportunity for growth to both the listing company and investors, but warns that both parties should make sure that they fully understand the relationship between the asset and the market in which it wishes to be listed before making any money moves.

Booysen highlights that a dual listing is also something that investors should keep their eyes on since it involves two stock exchanges, with opportunities to cash in working interchangeably between the two.  

“Essentially, if a dual listing’s share price, let’s say, in London and South Africa, are out of line, that’s an arbitrage opportunity so you can make risk-free profit,” he says. “You can buy in London and sell in Johannesburg, and you’d essentially be buying and selling the exact same thing at different prices. So you can lock in your profit, instantly.”

Different Types of Listings, simplified

Inward Listing: Mostly used from the perspective of the stock exchange (e.g. JSE), an inward listing occurs when an external or foreign entity invests in a local market.

Primary Listing: A company’s main stock exchange. This is often the country’s initial listing upon launch, making their shares available to the public for the first time.

Secondary Listing: When a company already listed on a stock exchange (primary) decides to enter an additional listing. Reasons for this include an increase in liquidity, potential to raise capital and overall access to a new market. 

Dual Listing: A company that has two or more listings, whether it be primary or secondary. Investec and Unilever are examples. 

To learn more about the stock market and the basics of investing, CFI has a collection of free beginner-friendly educational articles created by experts. Visit the official CFI website to get started.

Stay up to speed on the ever-changing world of investing, make sure you tune in to Investment School, brought to you by CFI, every Thursday on The Money Show with Stephen Grootes (6pm-8pm). 

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