Africa’s largest retailer Shoprite’s share price knocked on Christo Wiese’s derivative transaction

*Update, the story written by Reuters was inaccurate. According to Christo Wiese, speaking on 702, the transaction was not a sale of shares but a derivative transaction aimed at stabilising his balance sheet.  Shoprite issued the following statement to clarify

Rand Merchant Bank (a division of FirstRand Bank Limited) (“RMB”) and Absa Bank Limited (acting through its Corporate and Investment Banking division) (“Absa”) (collectively the “Sellers”) announce the launch of an accelerated bookbuild offer of up to 17,017,500 Shoprite Holdings Limited (“Shoprite”) ordinary shares (the “Placement Shares”) pursuant to a derivative transaction entered into with Titan Premier Investments Proprietary Limited (“Titan”) (the “Placement”).

Titan and its subsidiaries currently hold c.79 million Shoprite ordinary shares, representing c.14% of the total issued ordinary shares of Shoprite. Titan has entered into a collar transaction with the Sellers on c.18.9m of Shoprite shares (the “Collar Transaction”). This transaction is part of Titan’s ongoing investment and balance sheet management. Following the Collar Transaction, Titan will have achieved the optimum composition of its balance sheet and no further transactions in relation to Shoprite are contemplated.

Titan believes that it is prudent to manage portfolio risk through this hedging transaction given Shoprite’s concentrated position in its investment portfolio. The Collar Transaction enables Titan to protect a portion of its Shoprite exposure. Titan continues to believe in the long-term value of Shoprite and will remain a strategic investor in the company.

The Placement Shares represent 2.9% of the total issued ordinary shares of Shoprite. The Placement is being made to qualifying institutional investors only and is not an offer to the public in any jurisdiction. The book for the Placement is open with immediate effect and is expected to close as soon as possible. Pricing and allocations will be announced as soon as practicable following the closing of the book.

RMB, Absa and Morgan Stanley & Co. International plc are acting as joint bookrunners (the “Joint Bookrunners”) for the Placement.

JOHANNESBURG (Reuters) – South African tycoon Christo Wiese sold part of his stake in grocer Shoprite (SHPJ.J) on Wednesday, raising 3.6 billion rand ($264 million) and shoring up his finances, which were dented by his exposure to scandal-hit Steinhoff.

Shoprite’s share price dropped almost 6% to R211,55 on Wednesday. 

READ: Billionaire Christo Wiese sells over $80mln in Shoprite shares

Nearly $15 billion has been wiped off Steinhoff (SNHJ.J) (SNHG.DE) shares over the last six months after the owner of Mattress Firm and Conforama revealed holes in its accounts.

Wiese was particularly hard hit by the fall as the largest shareholder in Steinhoff, with a stake of about 20 percent.

Wiese’s company Titan sold 17 million shares, or a 2.9 percent stake, at 210 rand each in Shoprite, a 130 billion rand company he transformed from just six outlets in the 1970s to hundreds across Africa.

“This transaction is part of Titan’s ongoing investment and balance sheet management,” Morgan Stanley said in a statement. “Titan continues to believe in the long-term value of Shoprite and will remain a strategic investor in the company.”

The sale, which was via a so-called accelerated bookbuild, reduces Wiese’s stake in Shoprite to about 11 percent. He stake was as big as 17 percent in early December.

Shares in Shoprite fell as much as 9 percent before recouping some of the losses to trade 5.3 percent lower at 212.99 rand as of 0844 GMT.

RMB and Absa also helped arrange deal.

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