Viceroy: Capitec is ‘a wolf in sheep’s clothing’

Viceroy, the group that exposed accounting fraud at Steinhoff, has struck again.

After weeks of speculation about which South African firm it had in its sights, the group on Tuesday  published a report on South African bank Capitec  and the unsecured lender is feeling the heat.

Capitec’s shares were trading down 7.8% on Tuesday at 10:30, after earlier trading down 10%. The best performing share on the JSE over the last ten years has seen a drop of 20% since Friday.

Viceroy came to prominence for South African investors after it released a report into Steinhoff shortly after the Stellenbsoch-headquartered firm’s share price tanked.

In a new 33-page report, published and uploaded to the Viceroy website, the short sellers said they did not buy Capitec’s ‘good news story’.

“Capitec Bank Holdings Limited is a South Africa-focused microfinance provider to a majority lowincome demographic, yet they out-earn all major commercial banks globally including competing high-risk lenders,” the group wrote.

“We don’t buy this story. Viceroy believes this is indicative of predatory finance which we have corroborated with substantial on-the-ground discussions with Capitec ex-employees, former customers, and individuals familiar with the business”.

Update

Capitec responded on twitter that it had taken note of the Viceroy report, and it was in the process of investigating it.

Update 2

On Tuesday afternoon, the South African Reserve Ban announced that Capitec was “solvent, well capitalised and has adequate liquidity”; however, its share price was down 18.98% at R831.

More to follow. –  Fin24

Jan Cronje
Jan Cronje
Fin24 Journalist based in Cape Town.
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