A2X CFO: It's tough being up against the JSE
Otsile Matheba believes the new exchange will overcome the challenge of competing with a monopoly.
When Otsile Matheba left his job as financial manager at Peregrine Securities for the role of chief financial officer at A2X Markets, he didn’t quite know what to expect, though he did know it would be full of challenges and rewards – hopefully in equal measure.
Otsile joined A2X in December last year, when the secondary listing exchange was still very new – it had launched just three months before, in October 2017. When he took on the mantle of CFO, the finance function was in its early stages of development. Undeterred, he got stuck in right away, driven to make a success of it. Aside from largely establishing all the finance systems and processes from scratch, Otsile also had the matter of an audit to contend with, which was due end-February. He is still the one and only member of the finance team, but has no doubt that as the company grows, so will the finance office.
Otsile says that building A2X’s finance function from the ground up was something he really looked forward to:
“Since I joined I’ve been working to establish the company’s finance function and ensure that we’ve got a very good base from which to build. I’ve spent a lot of time getting the basics in place, as well as helping with governance and regulation over and above this. I’ve always had very strong ideas about how a finance function should look and work, so I looked forward to this clean slate. It was a great opportunity to design things the way I thought they should be.”
He continues: “On a personal level, all growth is uncomfortable but it’s good for you. It’s something I’ve personally embraced because you get to learn so much more. Coming into this industry and a startup, your learning curve is immense. It’s also got great challenges. You can’t be afraid to ask questions. I don’t know everything but I’ve got fantastic colleagues. There are a lot of people here with good experience from whom I can learn. Also, we’ve got a relatively small team so everyone puts their heads together to devise solutions to issues as and when they arise. We discuss these things as a collective and everyone gives their perspective on different aspects. The timing has been great as well; A2X went from three listings with a combined market capitalisation of R14 billion when I joined, to 10 listings with a market cap of close to R300 billion in just eight months.”
Heading up the finance function for a stock exchange must come with a fair few challenges and quirks. Otsile considers before answering:
“Specifically from a finance perspective you must execute within budget and ensure your forecasting is on point, because you need a long runway to get to the point where you are profitable and can create and make the headway you want. Also, we need to ensure we aren’t frivolous in terms of what we spend. So we are strict with our budget.”
"One of the things we’ve tried to do as a business is not treat ourselves as a small company but rather, get ourselves up to a level where our finance function is comparable to any big, listed entity. We set high standards for ourselves.”
Asked whether the fledgling exchange has found its feet in the industry, Otsile answers with a quick and confident yes. “You can imagine what things are like being a startup – you’ve got your feet firmly on the ground but there are things coming at you all the time,” he says with a laugh.
“We’ve made a lot of progress in a very short time. By mid-July, we had 10 listings, two of which are top-40 companies. We’ve got a lot of brokers in South Africa connected to us and able to trade. Something we have found is that we’ve had to play an almost educational role for the rest of the market. While secondary listings are well known in other countries, they’re new in South Africa. As such, we often find that when we approach companies, we have to spend a lot of time first educating them in terms of the framework and how secondary listings work.”
Hiccups aside, Otsile is confident that all of the foundations are now in place – backed up by great technology – and that the company can now “spread its wings and soar”. He says: “We’ve got the right experience and personnel in place, so now it’s about executing our strategy and getting more companies to list. With that said, creating change is hard. We are up against a monopoly with the JSE and that’s difficult. But we’re confident that, given time, we’ll be able to overcome the challenge this presents.”
Despite its newness, Otsile says the exchange has received a great deal of support. “A lot of companies want to see us succeed,” he says. “People seem to have realised the importance and benefits of having competition. The pipeline in terms of the companies we are talking to is very exciting, as is the potential of what we are trying to achieve and what it means not just for us but for the industry and economy as a whole.”
Asked whether he ever considered a different career path to finance, Otsile laughs and says yes. “Straight out of high school, I had an Accenture bursary to study electrical engineering. At the very last moment, when I went to register, I realised this wasn’t something I wanted to do. It was one of the bravest decisions I’ve ever made,” he says thoughtfully. “I left the paid-for engineering route and, the child of a single parent, found myself without funds to study. It was a big debt for myself and my mother, who had to dig into her savings. But later on you see the rewards of your hard work, because I really put my heart into my studies. All I knew was that I wanted to be in business. I had some friends studying accounting and decided to join them. I have no regrets.”
Otsile shares some of the lessons he’s learnt thus far on his career journey:
“In my career I’ve worked for Coca-Cola, ABI/SABMiller, Peregrine and A2X. Something I have learnt is that company culture is very important. Now, that’s the number one thing I look at before joining a company. Because I realised that there are certain cultures where you’re going to succeed and where the company’s values align with your own. Before accepting a position, you need to learn about the culture of the company and the manager with whom you’ll be working. It’s a learning curve to realise there will be environments where you blossom faster, quicker and easier than others.”
He says that his current focus is to try and ensure A2X is as successful as it can possibly be. “That’s my immediate focus for now and the coming years; to ensure we make an impact. Being impactful and making a difference is important to me. I’m lucky to have joined a company that does this on a daily basis. I get up each day to help meet this goal.”
Asked what makes him – a young CFO – most excited when considering the future of the finance industry, Otsile says the rate of change currently taking place, which he says provides an opportunity to reimagine the role that financial services play in people’s lives.
“We are seeing more and more the role that technology plays, not just in our jobs but out in the industry. There’s a lot of potential embedded in the industry and across all aspects, whether you’re looking at blockchain, automation, or machine learning. There’s a lot that can be done. There are so many new companies that have launched recently which are making life easier for the end consumer, and which are doing this in radical ways. We’ve also got better financial inclusion for everyone, which bodes well for the finance industry. Choice is very important in that instance and I think that’s where A2X comes in. We provide that choice at a much lower cost, which means the traditionally dominant players in the industry become less desirable in the services they offer.”
You can read the full interview and find out what Otsile believes makes a great CFO in the Q4 edition of CFO Magazine, available in airport lounges now.