Capitec chairman Riaan Stassen offloaded R68m worth of shares in the bank last week, ostensibly so he could put money into a new investment venture.
This adds to a trend in which Capitec’s top brass has sold more than R126m of stock in the high-flying microlender in the past seven months, as concerns over its lending practices have grown.
However, Capitec spokesman Charl Nel says there is little to be worried about as the number of shares sold by the directors is small in relation to their total holding.
In April Stassen sold R37.6m in shares.
In May, Summit Financial Partners lodged a case of "reckless lending" against the bank over its controversial "multiloans" product. Summit claimed the bank does not do proper affordability checks on its borrowers despite charging a new initiation fee every month.
Summit CEO Clark Gardner says he held many meetings with Capitec executives (including CEO Gerrie Fourie, CFO André du Plessis and chief credit officer Jaco Carstens) before lodging the case.
"I sent an e-mail to [Fourie] three months prior to our case, alerting the media," says Gardner.
Though Capitec has successfully defeated a probe by the National Credit Regulator, the pending court scrutiny of its lending practices has also coincided with a spate of selling by its executives.
On April 19, Du Plessis and his Bergrant Trust sold R5.6m worth of Capitec shares. A few days later, Stassen and his DSE Ventures sold R37.5m worth of shares. This was followed by the sale of R15.1m in Capitec stock belonging to trusts and companies associated with Fourie.
This contrasts with the trend between January and April, when Stassen, Fourie and Du Plessis were net buyers of Capitec shares worth more than R20m.
Stassen’s share sale last week is the largest in recent months. When asked about these sales by the Financial Mail, he was coy about his new venture, saying it is still in its infancy — though he added it isn’t in the banking sector.
Brad Preston, chief investment officer for Mergence Investment Managers, says that while microlending is certainly still a profitable business, the credit landscape has altered dramatically.
"The law has become more stringent on lending criteria, adding the requirement of an affordability test. This requires the borrower to provide three months of bank statements or written proof of three months of income.
"The second change has been the reduction in the maximum interest rates and fees lenders can charge on loans," he says.
Though the recent Capitec share sales may leave some investors jittery about prospects for the sector, it may be a bid by the directors to cash in on the bank’s share price, which has been touching record levels of late.
Over the past six months, Capitec’s stock has climbed 22.6%. This is less than Nedbank’s 38% rise, but in line with Standard Bank (up 27%), FirstRand (19.7%) and Barclays Africa (18.7%).
However, Capitec’s stock now sits on a p:e of 22, making it more than twice as expensive as that of any of its peers. This is why, of 12 analysts who cover Capitec, six rate it a "sell", compared with one "hold" and five "buys".
Quite what Stassen’s new venture is may become clear in the next few months.
A former accountant, he headed operations at Boland Bank, where the idea of Capitec was born. After Boland’s merger into Nedbank, Stassen and other executives approached the PSG Group with their plan.
At the dawn of the new millennium, Capitec came into being, with the backing of PSG.