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Christo Wiese’s bizarre R1.1 billion Shoprite share transactions

Billionaire businessman Christo Wiese recently made seemingly strange transactions in Shoprite’s shares. The businessman sold, bought, and borrowed almost 4 million of the company’s shares.

Wiese was an early investor in Shoprite and has served on the retailer’s leadership team for years. He is currently a non-executive director on the board.

It is important to look back to October 2023 to understand Wiese’s most recent dealings in the company’s shares.

On 10 October 2023, Titan FinCap (TFC), Wiese’s investment vehicle, sold 3.83 million Shoprite shares for R243 per share. This amounts to a transaction value of R938.64 million.

Two days later, on 12 October 2023, TFC entered into a security lending agreement whereby it borrowed the same amount of Shoprite shares, 3.83 million, on the open market.

There was no upfront payment for the borrowing transaction, and TFC was obligated to return the exact number of Shoprite shares to its lender. 

Almost exactly a year later, on 7 October 2024, TFC bought 3.83 million Shoprite shares at R290 per share and returned them to its lender to settle the security loan it entered into.

Therefore, TFC sold the shares in 2023 for R243 per share (R938.64 million), then bought the same amount of shares in 2024 for R290 (R1.11 billion).

TFC, therefore, made a loss on this trade of around R173 million as the Shoprite share price increased since the securities were borrowed.

One day later, on 8 October 2024, TFC again sold 3.83 million Shoprite shares for R290 per share and recouped the R1.11 billion it had to pay to settle the security loan.

The next day, on 9 October 2024, TFC again borrowed 3.83 million Shoprite shares on the market at a price of R290 per share. This again obligated TFC to return the exact amount of Shoprite shares to its lender at a later date.

If TFC can purchase Shoprite shares for less than R290 at the security loan settlement date, it could return the shares to its lender and pocket the difference.

TFC could also return its borrowed Shoprite shares and end up in the same position as if it had sold its Shoprite shares without borrowing but with a smaller shareholding.

Many investors may find it strange that TFC would want to borrow Shoprite shares after selling the same amount.

This could be explained by the fact that, in South Africa, security lending transfers the voting rights of those shares to the borrower.

Therefore, it may have been important for TFC to retain its voting rights, which is why it opted to borrow the shares. It also indicates a long-term commitment to Shoprite.

However, TFC may feel Shoprite is overvalued and, therefore, wants to hedge itself from falling prices while still committing itself to remain a shareholder.

Daily Investor reached out to Wiese for comment on these transactions and was told that TFC disclosed the sale of the 3.81 million Shoprite shares as part of a structured trade 12 months ago. This refers to the transactions made on 10 and 12 October 2023.

“Titan has entered into a new transaction as disclosed in the recent SENS announcements on the 10th and 11th of October 2024,” Wiese’s representative said.

“On a net basis, no further Shoprite shares were disposed of as part of the restructured transaction, and Thibault Square (Titan’s main Shoprite holding entity) remains a shareholder of 60 million Shoprite ordinary shares and around 265 million Shoprite deferred shares.”

Below is an overview of Wiese and TFC’s transactions in Shoprite shares since October last year.

DateTransaction
10 October 2023Sold 3,831,164 shares
12 October 2023Borrowed 3,831,164 shares
7 October 2024Bought 3,831,164 shares
8 October 2024Sold 3,831,164 shares
9 October 2024Borrowed 3,831,164 shares

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