NO EASY ROAD AHEAD
Lewis is one of the preferred retailers, or perhaps more correctly microlenders, with a retail division that generates the need for loans. The company’s trading update was bleak with revenue down 2.1%, sales off 2.3% and debtors costs up 30%. The interest rate increase won’t directly hit Lewis as it is already charging at the maximum rate, but it will make it harder for its customers to repay and/or enter new hire purchase agreements. So while things are already tough in this space, it’s only going to get tougher going forward.
Lewis Group another 20%, and Standard Bank being able to force it to buy the last 20% via a put option. The price for the 60% holding is subject to NAV but looks like its around $700m. So what will it do with this pile of cash? With the group now streamlined as an African bank, will some go to expansion or maybe also a special dividend?