African Bank’s top investor tries to calm clients

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African BankThornTree Independent Newspapers Photo: Simphiwe Mbokazi.

Johannesburg - Coronation Fund Managers, the biggest shareholder in African Bank Investments Ltd, said a plunge of more than 90 percent in the lender’s stock in three days is immaterial to investment portfolios.

“The exposure to African Bank is not material in any of our client funds,” Pieter Koekemoer, head of personal investments at Cape Town-based Coronation, which oversees the equivalent of $54 billion (R579 billion), said in a note to clients yesterday.

“Equity exposure is very small and we have virtually no exposure to African Bank debt or money market instruments.”

The market value of African Bank, South Africa’s largest provider of unsecured loans, dropped by 9.6 billion rand since the Johannesburg-based company said August 6 that its founder quit in the face of record losses.

That shaved 2.1 billion rand off the value of Coronation’s 22 percent stake, according to data compiled by Bloomberg.

The lender accounts for 0.62 percent of Coronation’s Top 20 fund, which has 23 billion rand in assets, and 0.37 percent of Coronation’s Balanced Plus fund with 64 billion rand in assets, according to the Cape Town-based money manager.

African Bank chief executive Leon Kirkinis, 54, resigned as the company, known as Abil, announced it will post a fiscal full-year loss of as much as 7.6 billion rand and would need to raise more than 8.5 billion rand to bolster capital levels, following a rights offer in December.

Abil dropped 10 percent to 45 cents as of 2:44 pm in Johannesburg for a market value of 690 million rand.

The securities slid 81 percent yesterday and 61 percent the previous day.

Coronation fell for a third day, declining 0.5 percent to 93.08 rand.

 

Help Needed

 

Coronation won’t comment beyond the note to clients, spokeswoman Louise Pelser said by phone today.

The Public Investment Corporation, Abil’s second-largest shareholder with a 12 percent stake, has given the lender a week to complete a turn- around plan before deciding whether it will provide more support, a Johannesburg-based business newspaper reported, citing chief investment officer Daniel Matjila.

“If the top three shareholders get together and will put in the money, calculations show that Abil will survive,” Kokkie Kooyman, the head of Cape Town-based Sanlam Global Investments, which has $900 million under management, said yesterday by phone.

The South African Reserve Bank is in talks with Abil, Hlengani Mathebula, an SARB spokesman, said yesterday by phone from Pretoria, without giving more details.

Mathebula didn’t immediately respond to two e-mailed requests for comment.

Abil’s share price has plummeted 98 percent since Coronation started increasing its stake in the business from 4.9 percent two years ago. - Bloomberg News


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