Namibian depository receipts

Definition

Namibian Depository Receipts (SADRs) are financial instruments that allow investors outside of Namibia to indirectly invest in securities listed on the Johannesburg Stock Exchange (JSE). 

What are Namibian depository receipts?

SADRs represent ownership of shares in Namibian companies, but they are issued and traded on exchanges outside of Namibia, typically in international financial centres like London or New York.

With SADRs international investors get a convenient and cost-effective way to access Namibian equities and diversify their investment portfolios. They enable investors to participate in the growth potential of the Namibian economy and its leading companies while benefiting from the liquidity and transparency of international financial markets.

The trading of SADRs are subject to regulatory oversight by relevant authorities in the jurisdiction where they are listed. Additionally, the underlying Namibian companies must comply with regulatory requirements set forth by the JSE and other regulatory bodies.

Investors in SADRs are exposed to currency risk, as fluctuations in exchange rates between the foreign currency denomination of the SADRs and the investor’s home currency can impact investment returns. However, for investors seeking exposure to Namibian equities, SADRs provide a means to manage this currency risk while accessing the potential returns of the Namibian market.

Example of Namibian depository receipts

Let’s consider an investor based in the United States who wants to purchase SADRs representing shares of a prominent Namibian mining company listed on the Johannesburg Stock Exchange (JSE). Instead of directly buying shares on the JSE, the investor buys SADRs traded on the New York Stock Exchange (NYSE), denominated in US dollars. Through these SADRs, the investor gains indirect exposure to the performance of the Namibian mining company without the need for international brokerage accounts or currency conversion.