Purple Group’s R105 million rights offer details

Charles Savage

Purple Group has provided details about its rights offer through which it plans to raise R105 million to grow EasyEquities and the products it offers clients.

Purple Group CEO Charles Savage previously explained that the new capital would be used to fund the growth strategy of the Easy Group of companies over the next three years.

The Easy Group houses EasyEquities and its subsidiaries EasyEquities International, RISE, EasyProperties, EasyCrypto SA, and EasyEquities Australia.

The money will be spent in three areas.

  • 30% to increase the pace of growth on EasyEquities’ South African assets.
  • 30% on new products, like credit and insurance, to deliver to EasyEquities’ customers in South Africa to increase the average revenue per customer.
  • 30% to scale the group internationally, starting with the Philippines and moving into South-East Asia.
  • 10% will be reserved to have the capital to buy distressed assets when the opportunity arises.

Savage is upbeat on the prospects of providing shareholders with a good return on capital through the capital raise.

He cited the R100 million capital raise six years ago to fund EasyEquities when Purple Group’s market cap was R200 million.

“We raised R100 million, and we 10xed [providing a return to shareholders of 10 times, or 1,000%],” Savage said.

“We took R100 million and created more than a 10x – most likely 15x – return on that R100 million.”

He said that when the capital was raised, EasyEquities was tiny, with around 50,000 customers and only Satrix as a partner. “Despite all of that, we could still 10x it.”

Savage is even more bullish on the planned R150 million capital raise to further drive the Easy group’s growth. “What we will do is to more than 10x it,” he said.

Purple Group rights offer details

Today, Purple Group announced they would proceed with a rights offer and that 27% of shareholders have irrevocably committed to exercising their rights.

Purple Group will issue 129.63 million new shares – 10.20567 rights per 100 Purple group shares.

The rights offer shares will be issued for 81 cents per share, and rights can be exercised from 24 May to 6 June 2023.

Purple Group said this price is at a 32% discount to the volume weighted-average share price of the past 7 days.

Purple Group has agreed with an underwriter to acquire up to R76.52 million of the rights offer shares if not all rights are exercised by shareholders.

Rights not exercised by shareholders will be available to other shareholders who wish to apply for more rights than were issued to them.

Daily Investor calculated the ex-rights price that would leave an investor in a neutral position as R1,07.

It means that at R1.07 per share after the rights offer, Purple Group shareholders who exercise their rights would not have made any gain or loss.