PSG keeps promise and offloads 28.1% of its stake in Capitec
JOHANNESBURG – Investment giant PSG Group has kept its promise to reconsider its exposure to Capitec, announcing on Tuesday that it had decided to spin off 28.1 percent of its stake in the country’s second biggest retail bank to unlock value for its shareholders.
PSG said it would distribute over 32 million shares of its Capitec total issued share capital to shareholders.
The PSG Group said late on Tuesday that the unbundling would result in it retaining a 4.3 percent stake in Capitec through its subsidiary PSG Financial Services.
Denker Capital portfolio manager Kokkie Kooyman yesterday said the Capitec divestment was not too big to make any dent in PSG’s total picture.
“By removing a large part of Capitec it makes other businesses in PSG a lot bigger and more meaningful,” Kooymay said. “Investors will look at what the rest of PSG is doing.”
Last month, PSG told investors that it was investigating and was seriously considering all or some of the shareholding in Capitec.
The group attributed the unbundling to new legislation that may potentially deem the company to be a financial conglomerate.
It said the new legislation would substantially increase its administrative burden.
The group also said the board believed an unbundling may unlock value for PSG Group shareholders given the substantial discount at which PSG Group shares traded.
Kooyman said that Capitec, which has a R105 billion market capitalisation, was a phenomenal and well managed business.
He said it was, however, an expensive banking investment relative to other banks in South Africa.
Kooyman said the bank would weather the coronavirus (Covid-19) pandemic due to a healthy client base.
“The next set of results are going to be interesting in terms of whether clients have defaulted. They have been very conservative and the acceptance rate of clients has been very low.
"I think their client base is healthy, and I think they should come out of Covid-19 healthy as long as their clients continue to make payments after lockdown,” he said, adding that banks sold insurance to clients in case something happens to their clients, including losing their jobs.
Kagiso Asset Management head of research Abdul Davids said the timing of the unbundling was good.
Davids said the unbundling would unlock value for PSG shareholders.
He however said the unbundling meant Capitec was losing an anchor shareholder.
“Capitec is losing an anchor shareholder. It is not great to lose a founding shareholder and anchor shareholder,” Davids said.
PSG rose 0.05 percent on the JSE yesterday to close at R171.95