Marcia Klein

Marcia Klein

The Johannesburg Securities Exchange will get one of the biggest shake-ups in its history today when British American Tobacco takes its place among the three largest listed companies alongside BHP Billiton and Anglo American.

BAT will launch a secondary listing on the JSE following a decision by the Rupert family's Richemont and Remgro to get rid of the bulk of their 19,4percent and 10,7percent respective shareholdings in the company.

Sasfin's David Shapiro said under normal circumstances, BAT would be a successful listing and attract much interest, but in current conditions, it was impossible to say how it would do.

Although BAT was not an investment for everyone because it is a tobacco company, it is "an emerging market growth story".

BAT's profit margins were high and it was a cash generative business.

"If you are not sensitive to things like tobacco, booze or gambling - it will not make it onto any SRI (socially responsible) index - it is a good investment."

Investec Securities analyst Thane Duff said the BAT share price should track the London price, so in that sense, the listing was something of a non-event.

However, he said that because it was an inward listing, it would, in terms of current rules, not be included in indices. This could see institutional shareholders having to sell BAT. He hoped this issue would be addressed.

The BAT listing also raises issues relating to investment in Richemont and Remgro shares now that they are not invested in it. It appears that investors will continue to be attracted to Richemont, which becomes a pure luxury goods group.

However, Remgro, an investment holding company, is left with a number of investments, many of which are listed themselves.