WENDY MACHANIK PROPERTIES
Reputations on the line
THERE’S NO QUESTION Purple Capital has seen better days. The heady highs of 230c/share in May 2007 are long forgotten, with its price currently trading at around 25c. And one has to ask whether it offers investors much. The stock has promised a lot but never really fulfilled its aspirations. So why not delist?
“If I could take it out at fair value then I would, but I can’t. And I promised myself I’m not going to be one of those guys who list at a price and then screw minorities by not realising any value and then delisting,” says Mark Barnes.
Essentially, the business has now pinned its hopes on derivatives trading firm Global Trader and sports betting startup Powerbet, which trades as Voltbet on the retail side. There’s a small treasury and corporate advisory business within the group, as well as a non-operating investment in micro-lender Real People South Africa that may over time yield rewards. But for 2011 the story is likely to be whether or not Global Trader continues to benefit from increased trade volumes and the anticipated explosion in sports betting in South Africa.
With the blowout at its European operations and the collapse of competitor Dealstream, Global Trader still suffers from something of a credibility crisis. Its management is more likely to be found partying up a storm on the side of a racetrack or entertaining clients at Sandton’s more trendy nightclubs than a quiet day out with Johannesburg’s elite at Inanda Polo Club.
Yet it’s that “work hard, play hard” approach that’s seen Global Trader secure more than 3 200 retail clients and seen it continue to turn profits in its 2008 and 2009 financial years despite the global financial crisis.
Keith McLachlan, a small caps analyst at Thebe Securities, says the leaner Purple