Rep­u­ta­tions on the line

Finweek English Edition - - FRONT PAGE -

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

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