Lebashe to increase BEE shares in Capitec

● Capitec Bank’s empowerment shareholding is set for a shake-up as investment group Lebashe Investments says it is in talks to increase its stake in one of the fastest-growing lenders by snapping up shares from its remaining black shareholders.

Lebashe, which includes prominent black businessmen such as former deputy finance minister Jabu Moleketi, is buying the remaining 1.6 million shares in the bank valued at about R1.4-billion from the bank’s empowerment consortium, Coral Lagoon Investments.

In 2007, Capitec issued 10 million shares to the consortium, which included ANCconnected individuals like former Johannesburg mayor Parks Tau’s wife, Pilisiwe TwalaTau and Gugu Mtshali, wife of former president Kgalema Motlanthe. At the time of the investment, Coral Lagoon paid R300-million for the 12.2% stake in Capitec at R30 a share.

In 2012, the PIC’s Isibaya Fund bought part of Coral’s stake and sold it to Lebashe three years later, making it the biggest black shareholder in Capitec.

At close of trade on Friday, the bank was valued at R104-billion, more than 2 600% increase since the deal was first finalised.

Last year Lebashe submitted an offer to acquire the remaining 4.7 million Capitec shares owned by the Coral consortium but only managed to secure 3.1 million shares.

Warren Wheatley, the chief investment officer at Lebashe, told Business Times that they were now looking at acquiring the rest or potentially listing in a BEE scheme.

“It is not an exit entirely. [The deal] is looking at a mechanism to create a liquidity event, so we are busy doing an investigation as to how best to do that,” he said.

When Capitec undertook its empowerment deal more than a decade ago, it was subject to an evergreen lock-in which requires that shares could only be sold to BEE investors.

Capitec chief financial officer André du Plessis said the group was not aware of any exchange of shares among its empowerment partners and that the lock-in was still in effect.

The evergreen lock-in creates a situation unfavourable to discount on the shares as the BEE shareholders have a limited number of potential buyers that have both the capital and credentials to purchase the shares, according to Ajay Lalu, MD of Black Lite Consulting.

Further complicating the situation is the court verdict that favoured the once empowered always empowered concept. But Lalu said it was highly unlikely that the once empowered always empowered concept would spread across other sectors.

“Unless there is a political shift in policy direction, I don’t think you would see the contagion extend beyond mining to other industry chapters,” he said.

Capitec’s black ownership, both direct and indirect, sits at 15.72%.

Coral Lagoon did not respond to a request for comment.