Karooooo buzz ignites Cartrack
An international listing for Karooooo, the new holding company for vehicle recovery and fleet management group Cartrack, is already dealing with much greater volumes of stock traded each day, the company’s founder and CEO, Zak Calisto, said on Wednesday.
In February, shareholders in Cartrack approved a plan to roll the company into its founder’s investment vehicle, Karooooo.
The complex deal was done to open up Karooooo to larger pools of capital on offer in the US market. On listing on the Nasdaq, the group raised $33.8m (R482m).
In an interview with Business Day, Calisto said average trading volumes are now at about R60m a day since listing on the Nasdaq. Before the US listing, about R400m worth of Cartrack stock was traded in a year.
“Our liquidity has gone through the roof already. Clearly we now have to work on awareness, which our investor relations will do.
“I certainly believe that will get the investor community internationally to become aware of our stock,” said Calisto.
In a sign of heightened interest, Karooooo shares shot up more than 10% on Wednesday as they began trade on the JSE. Almost 99% of Cartrack shareholders opted to remain invested in the new holding company, Karooooo, which listed on the Nasdaq on April 1, with an inward listing on the JSE.
Chris Logan of Opportune Investments, who has been following Cartrack for several years, said Karooooo is set to attract more investment once the company releases its earnings, because a number of large investment banks will start reporting on it, potentially attracting fund managers.
“It just shows you how tradable and how big an improvement the Nasdaq has been for them. The share price has doubled and there’s more and more trading, even though there’s still a small float relatively.”
Karooooo, headquartered in Singapore, is positioning itself as a leading global mobility software-as-a-service platform that provides real-time data analytics to the transport and logistics sectors.
Cartrack said it is well positioned for accelerated growth following its strong historical growth trajectory.
Prior to Covid-19, Cartrack had achieved compound annual growth in its subscriber base of 22% for the five years ending February 2020.
Although the pandemic subdued the company’s performance during the first two quarters of its 2021 financial year it still grew its subscriber base by 16% for the year.
Logan said “the potential growth and runway reminds me a lot of Capitec, especially their obsession with low costs and value to customers”.
Shareholders who opted not to remain invested were offered a buyout of R42 per share, a 40.56% premium to the closing price of a Cartrack share of R29.88 on September 8.
That was the last trading date before the date on which the first cautionary announcement was published.
Having started trading at R59,
Karooooo’s stock ended the day at R525.01, an almost 10-fold jump. But that reflects a swap ratio in which Cartrack shareholders received one Karooooo share for every 10 Cartrack shares held.
PRICE JUMP
Logan explained that part of the jump in the share price could be explained by a consolidation that happened as part of the listing.
In simple terms, “as an old Cartrack shareholder, you could reinvest in what’s now Karooooo”, he said.
He said a number of people sold shares in Karooooo earlier on Wednesday, not realising a consolidation had happened. Before delisting, Cartrack had been trading at just below R50.
MISSING OUT
“When it [Karooooo] opened today, sellers didn’t realise that there was this 10 for one consolidation and that the price should be about R500.”
According to Logan’s calculations, sellers who were unaware of the consolidation lost about R12m as a result.