Sunday, May 19, 2024

Farouk Ismail reduces stake in Choppies in Standard Chartered deal

Farouk Ismail, one of the majority shareholders in Choppies Limited, has reduced his stake in the giant retail company in a transaction done in December.

According to the Botswana Stock Exchange listed retailer, an off-market transaction held late last year has resulted in the transfer of 150 000 000 ordinary shares, representing 12.77 percent of issued shares between Ismail and a subsidiary of one of the world’s leading bank, Standard Chartered bank.

Choppies Chief Executive Officer, Ramachandran Ottapathu, this week confirmed the off market transaction which was under the legal watch of Collins Newman Law firm.

Ottapathu said the transaction which happened on 18 December 2013 saw the transfer of the concerned shares to Standard Chartered Private Equity of Mauritius.

Under the deal, Ismail’s shareholding has now been reduced to just over 21 percent leaving Ottapathu as the major shareholder (34.2 percent).

Ottapathu and Ismail were the major shareholders of Choppies before it went public, but their shares were whittled down to 34.2 percent from 46 percent following the Initial Public Offering (IPO) and subsequent listing at the BSE two years back.

The group, one of the markets leading mass grocery retailers in the country, retails fast moving consumer goods, household goods, fruit and vegetables, meat products, dry, fresh and baked goods through its stores in both Botswana, South Africa and soon in other African countries.

Choppies operates 73 retail outlets in Southern Africa, comprising 56 stores in Botswana, and 17 stores in South Africa.

With the proposed acquisition in Zimbabwe, the number could rise to 83, should the two parties agree to rebrand the soon to be acquired 10 supermarkets in Zimbabwe.

The company executives also have their eyes set on the Mozambique, Zambia and Tanzania where the group believes there is still room for growth in the retail sector.

Despite this success, the company has however in the past attracted criticism from some sectors of the local community for its salary discrepancy.

Employees such as cashiers and packers claim to earn less than P1000 a month, whilst executives such as the CEO and Deputy Chairman earn more than P500, 000 per annum.

This has attracted outrage as the company is historically very profitable yet is believed not to be rewarding the lower-skilled workers on terms they consider fair to their efforts.

In its annual report last year, the company confirmed to have paid its Chief Executive Ottapathu P10, 934,036 for the year that ended June 2013. This made his monthly salary to be over 900 times higher than that of most cashiers who earn a little over P1, 500 monthly.

At the same time, Choppies co-founder and deputy Board Chairman, Farouk Ismail, who has since offloaded some of his shares, was paid P9, 810,299 in total in the same year.


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