Founding shareholders in the Mouton family may sell their stake in Capitec Bank because of changes in legislation that could substantially increase the administrative burden of holding their more than 30% stake in the country’s biggest bank by customer numbers.
PSG, which is owned by the family, said it was “seriously considering” selling some or all of its stake in the bank in a statement on Wednesday morning.
Capitec is PSG’s largest investment and contributor to earnings.
The legislative changes that have triggered the possible sale are included in the Reserve Bank’s Draft Financial Conglomerate Prudential Standards, published by the central bank on March 5, which propose that financial conglomerates maintain a certain capital adequacy ratio from January 2022.
Harry Botha, analyst at Avior Capital Markets, said he does not think that PSG’s exit or reduction in its stake at Capitec will mean much for the bank operationally.
“However, the market usually takes increased stock availability through share unbundling transactions negatively. Capitec has sold off over the last couple of days on speculation of an unbundling. So, the sell-off might not be too severe today,” he said.
In the early hours of trade on Wednesday morning, Capitec shares had shed as much as 8%. PSG shares had gained just under 5%.
“Given the substantial discount at which PSG Group shares trade to its sum-of-the-parts value, the board believes such an unbundling may unlock value,” PSG, founded by the Jannie Mouton in 1998, said in a statement published on the Stock Exchange News Service.
PSG is the biggest shareholder in Capitec, holding roughly 30.7% of the bank’s issued stock. Other major shareholders of the bank include Limietberg Beleggings, the Government Employee Pension Fund and Lebashe Investment Group who all hold just over 7% stake each, the bank’s 2020 AGM notice shows.
PSG CEO and son of its founder, Piet Mouton, last week said the bank was one of the most resilient brands in the group when asked if any of its investments would require shareholder support in the wake of the Covid-19 pandemic.
“Capitec is most probably the best run company in South Africa. They are extremely proactive about how they deal with any new challenge they face. They really understand the principles of the industry,” he said in interview with Fin24 after presenting PSG’s annual results.