Abil’s top investor tries to calm clients during a 90% plummet in stockComment on this story
Renee Bonorchis and Mike Cohen
CORONATION Fund Managers, the biggest shareholder in African Bank Investments Limited (Abil), said last week that a plunge of more than 90 percent in the lender’s stock in three days was immaterial to its investment portfolios.
exposure to African Bank is not material in any of our client funds,” Pieter Koekemoer, the head of personal investments at Coronation, which oversees the equivalent of $54 billion (R575bn), said in a note to clients on Thursday.
“Equity exposure is very small and we have virtually no exposure to African Bank debt or money market instruments.”
The market value of South Africa’s largest provider of unsecured loans slid by R9.6bn after the Johannesburg-based firm announced on Wednesday that its founder had quit in the face of record losses. That shaved R2.1bn off the value of Coronation’s 22 percent stake, Bloomberg data show.
The lender accounts for 0.62 percent of Coronation’s Top 20 fund, which has R23bn in assets, and 0.37 percent of Coronation’s Balanced Plus fund with R64bn in assets.
Abil chief executive Leon Kirkinis resigned as Abil announced it would post a full-year loss of R7.6bn and would need to raise more than R8.5bn to bolster capital levels, following a rights offer in December.
Coronation would not comment beyond the note to clients, spokeswoman Louise Pelser said on Friday.
The Public Investment Corporation, Abil’s second-largest shareholder with a 12 percent stake, had given the lender a week to complete a turnaround plan before deciding whether it would provide more support, Business Day reported, citing the chief investment officer, Daniel Matjila.
“If the top three shareholders get together and put in the money, calculations show that Abil will survive,” said Kokkie Kooyman, the head of Sanlam Global Investments.
The Reserve Bank was in talks with Abil, spokesman Hlengani Mathebula said on Thursday,
Abil’s share price has plummeted 98 percent since Coronation began increasing its stake from 4.9 percent two years ago. On Friday the shares fell 38 percent to close at 31c. – Bloomberg