Large share deals by Capitec founder and CEO no cause for concern, analysts say

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Capitec CEO, Gerrie Fourie
Photo: Jaco Marais/Foto24/Gallo Images/Getty Images
Capitec CEO, Gerrie Fourie Photo: Jaco Marais/Foto24/Gallo Images/Getty Images
  • Capitec CEO Gerrie Fourie sold R56 million of his shares in the bank.
  • The bank's founder, Michiel le Roux, also completed a R1 billion hedging transaction.
  • Analysts say that these moves were no cause for concern. 

This week, eye-watering amounts of Capitec shares were transacted by its CEO Gerrie Fourie and founder Michiel le Roux.

Fourie sold R56 million of his shares in the bank in one go, while Le Roux completed a R1 billion transaction with his hedged Capitec shares.

Avior Capital Markets' head of research, Warwick Bam, said because executives usually need to sell shares to pay for the tax on their share incentives that vest, he wouldn't read too much into this.

"I assume that this is what Gerrie Fourie is doing," he said.

Rella Suskin, head of research at Benguella Global Fund Managers, also pointed out that considering that Fourie owns just over one million Capitec shares - which Refinitiv estimated to be valued at around R2.2 billion - the R56 million disposal is only 2.5% of his total holding.

"That isn't too significant," said Suskin.

Another analyst said as a Capitec shareholder, he would not be concerned be Le Roux's transaction either, as it was not an uncommon deal for directors with a large shareholding in a company.

"They buy puts and sell calls on their stock. The costs of these offset each other, making it a zero-cost transaction," he said.

Le Roux has hedged portions of his Capitec shareholding over many transactions in the past. The latest was in 2021 when he hedged another R2.5 billion of his Capitec stake over four tranches between August and December.

These hedges allow directors to borrowing against their shares without selling them, an option that Le Roux exercised in 2019, and again now.

"As far as I can remember, Le Roux does this sort of transaction on a regular basis. A large chunk of his wealth is tied up in Capitec shares. So, he takes loans out against these shares for liquidity," said Suskin.

She added that since Capitec has stated that the loan will be repaid in cash, Le Roux will not use shares to repay, meaning he's not diluting his stake in the bank.

"So, I don’t take it as an indication of loss of confidence," added Suskin.

While Capitec shares lost 7% of their value over the past three months, the shares remain up 33% over the past year. 

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