Nepi Rockcastle rejects probe call
• Ten institutions unable to clarify what they want to have investigated, says CEO as company awaits report from watchdog
Nepi Rockcastle, part of the Resilient group of property companies at the centre of allegations of insider trading and share price manipulation, has rejected requests by 10 of SA’s largest financial institutions for a probe into the entire stable.
Nepi Rockcastle, part of the Resilient group of property companies at the centre of allegations of insider trading and share price manipulation, has rejected requests by 10 of SA’s largest financial institutions for a probe into the entire stable.
CEO Alex Morar said no investigation could go ahead without a clear scope of what would be investigated.
In addition to Resilient and Nepi Rockcastle, the group comprises Fortress and Greenbay Properties. The four companies, which had been outperforming on the JSE, suddenly came under sustained selling pressure in January 2018.
Nepi Rockcastle’s share price is down nearly 40% since the start of the year.
The 10 institutions wanted an independent investigation led by one of the big four accounting firms to probe numerous allegations around the Resilient group. These include suggestions that there has been insider trading in the shares of its companies and that their stock may have been manipulated.
Morar said Nepi Rockcastle had created a subcommittee which had determined that a blanket investigation into the company was not feasible.
“We have spent the past few weeks engaging with the institutions which sent us the letter. Some of them are invested in Nepi Rockcastle, some have been in the past and some have not. As it stands they have not clearly said what they want to investigate and why.
“Some kind of blanket investigation is unfeasible and unreasonable. Also, a forensic investigation is not desired by our broader shareholder base, so we are not going ahead with one,” Morar said.
In an unprecedented move, asset management firms which collectively manage trillions of rand on behalf of millions of investors, including the Public Investment Corporation (PIC), sought an investigation after the collapse in the companies’ shares cost investors about R120bn in value. The action was seen as a potential turning point for corporate governance in SA as investors typically refrain from publicly criticising companies in which they hold shares.
A conference call with investors has been recorded and is available on the Nepi Rockcastle website. Morar said Nepi Rockcastle would now wait for the investigation by the Financial Sector Conduct Authority to end.
The authority’s probe has been continuing since March and is focused on possible insider trading and price manipulation, as well as potential false and misleading reporting with regard to the four companies.
Garreth Elston, a portfolio manager at Reitway Global, said Nepi Rockcastle had made good progress in dealing with the concerns of shareholders and a probe would not add value at this stage.
“While the Financial Sector Conduct Authority’s investigation timespan is not clear at the moment, we see it as premature to look for additional investigations to be undertaken before the regulator has completed and announced the results of its investigation,” Elston said.