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Spreadsheet Ranger

PSG might sell Capitec

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The country's biggest bank by customer numbers say nothing will change if and when the PSG Group sales its stake in Capitec Bank.


Founding shareholders in the Mouton family announced on Wednesday morning that they may sell the stake in Capitec Bank because of changes in legislation that could substantially increase the administrative burden of holding their more than 30% stake in Capitec.


PSG, which is owned by the family, said in a statement published on the Stock Exchange News Service (Sens) that it was "seriously considering" selling some or all of its stake in the bank.


But Capitec CFO, André du Plessis says nothing will change as the bank is run independently and the unbundling will merely a corporate action not affecting is strategy or operations in anyway.


"PSG Group explained its reasons for considering the potential unbundling of all or a part of their interest in Capitec to its shareholders in its cautionary of this morning. We understand their reasons and are comfortable with their decision of unbundling us in part or in full, or if they should decide not to proceed with their action," said Du Plessis.


He said the bank has had a good relationship with many of PSG’s shareholders since 2000 and this has not changed.


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.


Capitec's share price was more than 6% stronger on Wednesday afternoon after shedding as much as 8% in early morning trade. PSG shares' initial gains of under 5% were reversed by Wednesday afternoon and were almost flat by 5pm.


"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.


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