Food and beverage group Clover Industries on Tuesday launched its American Depositary Receipt (ADR) programme, in the US, through a sponsored ADR programme with BNY Mellon. 

Each Clover DR represents ten ordinary shares and trades on the over-the-counter (OTC) market in the US.

Commenting on the rationale for the programme, Clover CEO Johann Vorster said the company had seen a steady increase in its offshore shareholding since listing on the JSE three years ago, including a growing interest from US-based investors. 

The company held that DRs increased liquidity on the JSE, which drove up prices through increased demand.

An independent study of 628 companies showed that, within the first year of establishing a DR programme, liquidity increased by 48% on average and share prices increased by an average of 30%.

“This programme will enhance Clover's visibility in the US and provide investors with the flexibility to invest without the issues associated with crossborder and cross-currency transactions,” he said.

In addition, Clover would provide US investors with access to an attractive Africa-based industry with favourable fundamentals, owing to the aspirational nature of its products for the emerging middle class across the region.

“Clover has a number of exciting projects to support future growth, including expansion plans, supply chain optimisation, new product development with a focus on the beverage and yoghurt categories, as well as possible entry into new geographies in Africa,” he noted.

BNY Mellon DR division VP Lauren de Klerk added that DRs were gaining in popularity among South African counters. 

“Clover is the seventh South African company to establish a programme on the US market this year with BNY Mellon. More programmes will follow this year and we will work closely with Clover to enhance its profile and meet its objectives,” she said.

The other six companies to list programmes this year were Blue Label Telecoms, Growthpoint, Redefine, Cashbuild, Sibanye Gold and Mix Telematics .