Tuesday, October 27, 2020

Letshego stages biggest single trade in history

Letshego Holdings, the micro finance outfit, brightened the market last week with the largest single trade in recent history and prompted speculation that a stalker might be standing in the dark, weighing chances of a possible hostile bid.

A single trade, waged by an institutional investor on Thursday, saw over nine million shares exchanging hands ÔÇô possibly the first such kind of trade in over five years ÔÇô netting P 60 million.

And over the week, it closed with 10 million having changed hands but the biggest driver had been the Thursday trade, where its share price jumped from 625 thebe to 660 thebe – a bid of 35 thebe on the price.

The move saw the Domestic Company Index (DCI) rolling forward to 6062 points from the previous Thursday following Barclays single trade that triggered 6043 points when it moved up 37 percent to 4100 thebe per share.

However, the move drew a mixed reaction from analysts as some said there is a likelihood that a stalker might be standing in the dark, given that the share traded in a single day represented 6.6 percent of the company.

“I think one of the big institutional investors is aiming at possibly staging a hostile bid. And I hope in the coming days and weeks we are likely to see a developing trend as he tries to increase his shareholding,” one analyst said on Friday.

But most of the analysts stated that the move might be indicative of maturity on the local bourse, which has for a long time been known for its illiquidity.

“I think there is nothing surprising about the trade; of course, it is the single biggest trade in a day,” said Martin Makgatlhe, Managing Director of Motswedi Securities, a brokerage firm that acted on behalf of the buyer.

“What I think is that it shows maturity on our exchange which has always had low liquidity. It is good for the market.”

Leutwetse Tumelo, an analyst at Capital Securities concurred, “It shows that our market is growing when you look at the volumes. But it is hard to tell at this stage if some one is looking at a hostile bid at this stage.”

Letshego is the largest company operating in the country’s micro finance industry with other players being Penrich Employees Benefit and Blue Employees Benefit. Blue entered the Johannesburg Stock Exchange last week and is also looking at the prospects of listing on the Botswana Stock Exchange in the coming year.

The industry is benefiting from the unregulated market and can lend to customers without any restriction and with punitive interest rates unlike the commercial banks.

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The Telegraph October 28

Digital edition of The Telegraph, October 28, 2020.