Allan Gray takes big chunk of Kap off Steinhoff’s hands


The Kap share price has drifted back up to where it was ahead of Steinhoff’s offloading its 26% stake at the knock-down price of R6.85 a share.
Some in the market are still unhappy about the limited number of parties invited to participate in last week’s book-build and felt the R6.85 represented a discount on a share price that was already discounting the inevitable sale by Steinhoff.
This is reminiscent of the gripes that accompanied Dis-Chem’s entry to the JSE and which continue to haunt it. It probably didn’t help that most of the 694 million Kap shares offloaded by Steinhoff ended up being sold into the market within a day or so. Presumably it was hedge funds that scored a quick profit as the shares were passed on to longer term investors.
One of those longer-term investors was Allan Gray, or rather clients of Allan Gray, which bumped up its holding on their behalf to a hefty 28.14% from 13.2% last June. This is a significant vote of confidence in KAP and its management team.
While Allan Gray hasn’t always covered itself in glory as a major shareholder, given the very dark clouds hovering around Steinhoff, its dominance represents a substantial improvement. It should provide comfort to other investors tempted to buy into what is considered one of the few remaining, and well-managed, industrial stocks on the JSE.
The local market is now dominated by retailers, miners and bankers. The fact Kap also has some attractive businesses in the rest of Africa is a factor that often entices international investors.
Significantly, the PIC does not (ahead of any further post-book-build disclosures) feature as a major shareholder. Perhaps the manager of the government employees’ pension fund felt it had enough indirect exposure through Steinhoff.

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