Zak Calisto, founder and chief executive of Karooooo, was scratching his head in puzzlement yesterday after the shares debuted on the JSE by trading at about a 90 percent discount to the Nasdaq price, before correcting. Photo: African News Agency (ANA) Archives
Zak Calisto, founder and chief executive of Karooooo, was scratching his head in puzzlement yesterday after the shares debuted on the JSE by trading at about a 90 percent discount to the Nasdaq price, before correcting. Photo: African News Agency (ANA) Archives

Karooooo shares correct after mystery low prices at JSE debut

By Edward West Time of article published Apr 22, 2021

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CAPE TOWN - ZAK CALISTO, founder and chief executive of Karooooo, was scratching his head in puzzlement yesterday after the shares debuted on the JSE by trading at about a 90 percent discount to the Nasdaq price, before correcting.

The South Africa-based international fleet and asset-tracking software company started trading at R59 a share in thin volumes on the JSE yesterday morning, but moved to R441 after midday. The share trades at around R500 on Nasdaq. The company has its primary listing on Nasdaq and a corresponding inward listing on the JSE, following a delisting and restructuring of Cartrack.

Calisto said he was not sure why the share had traded at such a deep discount initially, possibly some shareholders were dumping shares for reasons unknown, there was some technical error or there were shareholders who were simply unaware of the value of the shares. Karooooo shares were issued to eligible Cartrack shareholders in a ratio of 1 Karooooo share for every 10 scheme shares held.

For example, if a Cartrack shareholder who participated in the reinvestment offer held 1 000 Cartrack shares at the scheme price R42 per Cartrack share, the shareholder would receive 100 Karooooo shares at a reference price of R420. As example of the difference of the liquidity of share trading on the JSE and Nasdaq, he said the value of trading of the shares of

Karooooo’s Nasdaq listing had, in the first 20 days, equated to an entire year of the former Cartrack’s listing on the JSE. He said the company continued to operate in line with its strong historic performance. Cartrack had listed on the JSE in 2014 at R8.50 a share, and traded at R72 prior to delisting this year. Earnings before interest, tax, amortisation and depreciation allowances had grown from around R300 million to R969m in the 2020 financial year. Through the restructuring, some 99 percent of Cartrack’s eligible shareholders had swopped their old shares for Karooooo’s shares through the reinvestment scheme.

Karooooo’s Nasdaq listing on April 1, 2021, raised $33.81 million (about R483m) in cash for general corporate purposes, including expansion and research and development.

Calisto said they believe the restructuring would create a more efficient global corporate and operating structure reflective of Cartrack’s international operations and growth strategy, it would broaden the shareholder base and would allow it to access capital markets where the company was previously restricted. He said the fact that 99 percent of Cartrack’s investors elected to remain invested in the company highlighted investor confidence in the leadership, business model and investment case.

JSE Capital Markets director Valdene Reddy said they were pleased that the company had decided to remain listed locally, giving investors an opportunity to benefit from Karooooo’s global expansion.

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