ZAR X CFO Ebrahim Ally recounts the gruelling journey of starting a stock exchange


"My pet hate word for 2017 is 'disruptive' - but dare I say it, that's exactly what we are."

By Toni Muir

Gripped in the teeth of some powerful competitive and economic headwinds, ZAR X, the second stock exchange to be licenced in South Africa in 58 years, has nailed down its status as a champion of financial inclusion and access. “We started out at a disadvantage,” says ZAR X chief financial officer, Ebrahim Ally. “When I joined the company in June last year, ZAR X had received a conditional licence, which the JSE then challenged. After receipt from the Financial Services Board (FSB) of a fully-fledged stock exchange licence in August, we still couldn’t commercialise what we had due to yet another challenge to the FSB process, this time through a combined application by the JSE and another new licence.” 

To preserve what was in the business, Ebrahim says all staff went on risk, none of them taking salaries. “We all believed so much in the difference we could make to the financial markets that we were determined to see the business through,” he says. “In a way, the interference served us well, because it provided objective proof that the FSB had followed all the right procedures in granting our licence.” This last application was also dismissed, and punitive costs were awarded against both applicants in February this year. “Our model was vindicated,” Ebrahim says, “and we could get going with the business.”

Ebrahim says the ZAR X team is “still running hard”. Each new listing gives the market confidence and gets people to sit up and take notice, he says.

“We are inundated with requests to understand and discuss our listing requirements, because we bring something different. My pet hate word for 2017 is ‘disruptive’ – but dare I say it, that’s exactly what we are. We have built a stock exchange from a clean sheet of paper and disrupted the status quo. We always ask the question, ‘why not?’, and we’re getting a lot of attention for that.”

Coming home
For Ebrahim, there was never a moment’s doubt that he would one day be a CA. After finishing his studies and completing articles at one of the Big Four firms, he followed through to one of the Big Four banks on a contractual bursary commitment, and then entered the asset management industry as an equity analyst with a leading Cape Town firm. He worked in this space for just over four years before moving on, though he had to observe a strict restraint of trade first.

Ebrahim recalls moving out of the asset management space. “When I left it was tough. I wanted to be in the markets, but the restraint meant that I couldn’t anymore. I enjoyed my next few roles, which were away from the markets, and this allowed me to re-invent myself. Now, being back in the markets, it’s like I’ve come home. It’s where I’ve always wanted to be.”

Ebrahim adds that he is very passionate about financial market education. “Give me a radio slot with the broader South African public and financial inclusion can become a reality,” he says enthusiastically.

Reinvent yourself
“In the early part of your career, you’re appreciative of where you are. You’ve got a degree, but you’re not sure where that is going to take you,” Ebrahim says. “I went from a Big Four firm to a Big Four bank and then to a leading brand asset management firm. And then into nothing. You ask yourself, ‘have I gone forwards or backwards?’ Sometimes you must take a few steps back and reinvent yourself. I told myself, ‘You dare not fail. You didn’t aggregate all that experience with all those great brands to not make something of yourself’. So, am I naturally ambitious? Of course! I think you have to be naturally ambitious if you want to take that CA qualification and do something entrepreneurial with it. I wanted to make something of myself for myself, for my family.”

Before joining ZAR X, Ebrahim was the CFO of The Wired Corporation – a large telecoms infrastructure company valued at over R1.4 billion. He left this role to join what was essentially a startup.

“When I came over to ZAR X, I knew exactly what I was getting myself into. Around 80 percent of businesses fail within the first year. If they aren’t extremely focused, that’s where things generally go wrong for small businesses.”

However, Ebrahim believes he successfully brought this discipline across and managed the company’s resources in a way that’s reflective of his experience in managing startup businesses. “I told the team to manage their expectations. It’s a new business, things will take a bit longer to get to where you’d like it to be. Financial resources need to be very carefully managed in the first 12 months. That was my responsibility and I think we’ve done that well,” he says.

The challenges seem to have helped the ZAR X team to bond and Ebrahim speaks fondly of his colleagues: “I love the people I work with. They are masters of their craft. I’d like to think I know my craft and that we gel well together; that we complement each other and respect each other. Discussions are often robust, though we generally get to the right decision in the end. This cohesion brings everything together. That’s incredibly important.”

“We’re a business of nine people that run a stock exchange. There’s no way you can be focused on only one thing,” Ebrahim says with a laugh. “I do business development, promote listings, run the HR function, a bit of marketing, I’m out there talking the talk; it’s exciting. It’s so much more than just a finance role – it’s an entrepreneurial role.”

Ebrahim says he particularly enjoys the dynamism and flexibility of his role. “I’m not boxed into just playing a financial role. I can play a role across the organisation, and we are flexible enough as a young company to be able to do that. Every employee engages and interacts across all aspects of the business. Here at ZAR X, we all act like owners of the business.”

Three listings
Asked how his time in the role has been, Ebrahim answers by saying, “We’ve got three listings under our belt – Senwes, Senwesbel and TWK Investments, with a combined market cap approaching R3.5 billion. That’s a good start. The proof of the pudding is in the eating. You can only show credibility when you actually bring listings on board. Liquidity levels are comparable with other JSE listings of similar size, nature and free float. That’s been our biggest success to date.”

ZAR X approaches South Africa’s current economic environment from a fresh perspective, seeing opportunities where others see problems. “In this tough economy, we start to see jobs being shed, including at the JSE,” Ebrahim says. “The incumbent is the dominant market player, and when a company that makes R900 million in after-tax profit decides to cut costs, you know things are tough.”

Generally, tough times translate into a difficult environment to raise capital, Ebrahim says, and it makes listings more difficult. “The smaller listings are always the toughest in this environment but therein lies an opportunity for us. Companies that want to raise money in this environment can’t afford to be bogged down in red tape and the costs associated with listing on a legacy exchange. They need to find other ways and other markets to raise capital, through non-conventional means. That’s where we can play a role."

"Through our technology and pragmatic listings framework, this creates an opportunity for us because we do things differently and are therefore able to access pools of capital not previously accessible. People are looking at us and saying there’s an alternative – a viable alternative.”

Ebrahim wants to see smaller businesses with great business models and above-average growth potential tap into public capital because the investing public is crying out for the opportunity to be included in the listings space. “With ZAR X, investors can open a share trading account for as little as R1,000, making owning a piece of the South African economy a reality,” he says. 

Gourmet braaing
Ebrahim believes he’s come full circle as far as leading a balanced life is concerned. “Asset management was hard work. The work-life balance of 15-hour work days for four years was difficult. I loved it, but left when I realised I had lost out on being with my family and seeing my kids grow up. So, in my new role as a CFO, I have made it my intent to develop somewhat of a more balanced perspective,” he says.

However, ZAR X being a fledgling organisation with huge growth potential, it requires a lot of effort, he says. “I think the time spent with my family over the last eight years means that now they can give me the support and the time to do this. I’m taking them along with me. They come here often, they see what we do, and they enjoy it. My kids understand what ZAR X does better than most seasoned financial professionals out there. My boys are 16 and 14, then come the girls aged 12 and four. I take the kids to school every day, so I get to spend that time with them and chat to them. When I get home, they ask me about my day. They take a keen interest in my work, which they didn’t previously.”

On weekends, to relax, Ebrahim says he enjoys golf and gourmet braaiing. He laughs and says: “What can be ‘gourmet’ about braaiing? I guess it could be as simple as slapping some chops onto the fire on a Saturday, but we’re talking about tandoori chops, chimichurri leg of lamb, and chicken tikka masala – not exactly your typical cuts. My wife Fatima is our gourmet caterer in the kitchen, which as a competitive person, pretty much means I have to bring my A-game to the braai stand! It’s a great family activity. We all take turns. The kids braai, my wife braais, we all braai.”

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