Piet Mouton: I speak up because we are not treated equally under this lockdown

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PSG CEO, Piet Mouton
PSG CEO, Piet Mouton
  • PSG CEO Piet Mouton has once again urged government to lift the lockdown and open the economy fully.
  • Mouton says people should be given an opportunity to make a choice about whether they want to stay at home or go out to earn an income.
  • He says thousands of small businesses have lost their voice, while the taxi industry is treated with kid gloves.


Toeing the line to be politically correct could be tempting, especially when it comes to airing views about the lockdown. One move and you are placed in the pro-life or pro-capital camp.

PSG CEO Piet Mouton has put his head on the chopping block twice.

On Friday, he delivered another bold statement, saying road fatalities kill more people in South Africa than the Covid-19 pandemic has. Less than three months ago, he said SA did not have the luxury to extend its lockdown.

"I have a lot of sympathy for people who've lost their lives because of the illness and I don't want to make light of the situation," said Mouton.

However, he argued, killing people's livelihoods by watching small businesses shut their doors permanently every day will cause more fatalities. Other commentators have also raised concerns that increasing incidents of hunger, mental health issues and social unrest - as the country moves more towards a survival of the fittest scenario - could pose a serious threat.  

How the lockdown affected PSG's investments

PSG itself has felt the impact of the lockdown in its own investee companies such as Curro, Capitec and the group's retirement villages, Evergreen Lifestyle. Mouton said Evergreen's sales had been "severely" affected since the lockdown began, as all its units are sold to elderly people who are still in a hard lockdown. The business was close to breaking even when the lockdown began, and PSG remains hopeful that once the property market opens up again and older people are willing to travel, it will recover again.

Capitec, which PSG is in the process of unbundling, released a statement earlier this month saying that the lockdown had caused an increase in bad debt provision and lower banking transactions, which culminated in the bank incurring a loss of R404 million for the quarter ended on 31 May 2020.

Curro said its school fee collections fell by 20% between March and April 2020 and that almost a fifth of its pre-school learners had left. Curro also has significant amount of debt on its balance sheet, which Mouton said the private school group would have been able to manage had it not been for the economic impact of Covid-19.

Mouton said PSG would support Curro's rights issue that the schooling group wants to undertake. It has subscribed for 103 million Curro shares and underwritten a further 40 million of rights on behalf of other shareholders. In total, PSG has now committed R1.15 billion of the R1.5-billion rights offer Curro had proposed.

Mouton said other PSG investments had performed well under the lockdown. Regarding those who have been affected, Mouton said they would have achieved 99% of their targeted performance had the lockdown not been put in place, even in the presence of the virus.

"By closing the economy, you've basically hurt the businesses tremendously." 

The unfairness must end

However, he said his criticism of the lockdown was not just about PSG, but the stripping away of people's ability to make a choice about whether they want to remain home or go out to make income that would allow them to continue feeding their families.

But of late, he thinks the fairness scale has been tilted in favour of those who can make threats government takes seriously, while "a person with a small wedding venue and the guy with a small business manufacturing bespoke furniture" have been left with no voice.

"Government comes out and says rules have been changed for the taxi industry because it will be destroyed. What about every single person who owns a restaurant? All the small shops that are not seen as essential; why aren’t they being treated the same as taxis? How unfair is that?" queried Mouton.

Change in PSG's dividend policy

He also announced that, after the unbundling of Capitec, PSG's dividend policy would change. Currently, the company returns 100% of its available free cash flow to shareholders as dividends. Now, PSG will not pay dividends "in principle", but will consider ad hoc return of capital to shareholders.

Part of the reason for this is because shareholders will now get the dividends they used to get from Capitec directly from the bank. Capitec's dividend constituted approximately 60% of the dividends PSG paid out to shareholders. But the other reason is that PSG is trading at a significant discount to its sum-of-parts.

Before the Capitec unbundling, the discount was 32.5%. After the unbundling, it will remain at 20% at prevailing price on the JSE. This means when the company wants to raise capital, it must do so at this heavy discount. Retaining free cash flow when it needs equity funding thus seemed like a prudent step to take, said Mouton.

"We will also look to pay dividends. But it will not be a rule anymore that we must pay dividends," said Mouton.

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