Break­ing ranks in Stel­len­bosch

PSG direc­tors sell

Finweek English Edition - - Companies & markets - LLEWELLYN JONES

TWO OF JAN­NIE MOU­TON’S most se­nior co­horts at the Stel­len­bosch-based fi­nan­cial em­pire en­com­pass­ing PSG and Capitec Bank have bro­ken ranks this year by sell­ing large tranches of stock into the mar­ket.

At PSG, ex­ec­u­tive di­rec­tor Chris Otto sold stock worth R13,8m last week, rep­re­sent­ing a sig­nif­i­cant re­ver­sal of his ac­tiv­i­ties to­wards year-end 2006, when he bought just un­der 300 000 shares in the open mar­ket at R17/share.

This latest sale rep­re­sents around 10% of Otto’s di­rect stake in the group, ex­clud­ing the op­tions he owns over an­other 1,2m shares. Otto was one of the found­ing fa­thers of PSG. In 1995 he and for­mer stock­bro­ker Mou­ton bought con­trol of a JSE-listed re­cruit­ment com­pany called PAG. They re­named the com­pany PSG and per­suaded a num­ber of well-known Stel­len­bosch busi­ness per­son­al­i­ties to take up shares in the group.

They then sold the old PAG busi­ness and started mould­ing the com­pany into a fi­nan­cial ser­vices group. It soon in­cor­po­rated a cor­po­rate ad­vi­sory ser­vice, in­vest­ment bank­ing ini­tia­tives, mi­croloans, stock­broking, as­sur­ance and as­set man­age­ment, plus a variety of other strate­gic hold­ings.

One of the ven­tures PSG spawned was Capitec Bank, which was built from the ground up fo­cus­ing on the mass mar­ket. Mou­ton fa­mously said he ex­pected the ven­ture to be a “small mis­take or a big suc­cess”.

The bank has proved to be hugely suc­cess­ful in its tar­get mar­ket, driven largely by main­tain­ing the low­est bank­ing fees in SA’s bank­ing sec­tor. That suc­cess is re­flected in its share price, which has rock­eted from 100c in 2003 to a high of R36/share over the past cou­ple of weeks.

So it’s with in­ter­est that we note that Capitec CEO Ri­aan Stassen has off­loaded stock worth R18,3m, rep­re­sent­ing around 16% of his stake in the bank, so far this year.

Stassen also holds op­tions over an­other 1,2m shares at ex­er­cise prices rang­ing from 142c to R14,05/share.

The real ques­tion is what th­ese sales by Otto and Stassen say to pun­ters about the im­me­di­ate prospects for PSG and Capitec. Mou­ton once told Fin­week that, in his opin­ion, peo­ple only sell shares in the com­pa­nies they man­age when they be­lieve there’s a bet­ter re­turn else­where.

Mou­ton was a con­sis­tent buyer of PSG and Capitec last year and he cer­tainly seems to be hold­ing on for the time be­ing.

Else­where this week, we note that Com­bined Mo­tor Hold­ings chair­man Mald­wyn Zim­mer­man, 71, off­loaded stock worth R33,2m in the mo­tor re­tail group. The sale rep­re­sents around 20% of his stake in the com­pany.

We note also that the Ack­er­man fam­ily is still mop­ping up shares in the pyra­mid hold­ing com­pany that con­trols Pick ’n Pay, spend­ing an­other R9,8m last week.

Two weeks ago we were won­der­ing what would hap­pen to the 5m op­tions owned by de­part­ing Pick ’n Pay CEO Sean Sum­mers, as the ma­jor­ity only ma­ture af­ter his of­fi­cial de­par­ture date at the end of this month.

Sum­mers says that he’ll re­main on at Pick ’n Pay as an em­ployee con­sul­tant un­til mid-2008. We can’t help but no­tice that’s just long enough to al­low him to ex­er­cise 90% of those op­tions. The profit on th­ese op­tions at cur­rent mar­ket prices is around R130m.


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