No sustained recovery on cards

THE controversy that has dogged Net1 since it won the R10-billion, five-year SA Social Security Agency (Sassa) contract to distribute grants in 2012 has prevented the share price from reaching the sort of levels many analysts had expected.

THE controversy that has dogged Net1 since it won the R10-billion, five-year SA Social Security Agency (Sassa) contract to distribute grants in 2012 has prevented the share price from reaching the sort of levels many analysts had expected.

It was described by the Constitutional Court as one of the most valuable tenders awarded by the government.

Not only has the tender process come under scrutiny, but so too has the way deductions are made from bank accounts of some grant beneficiaries by Net1 subsidiaries.

The share-price movement over the past year has reflected the controversy that surrounds the company with sharp surges followed by signs of weakness. It is 20% up from a year ago.

And at R143 it has made a good recovery from the R74 level to which it plunged after the Constitutional Court ruling against it late last year.

Serge Belamant, chief executive of Net1, has proved adept at navigating challenges, and it may be that his company will be able to hold on to the reissued tender. It may also be that the reissuing process will be dragged out so long that Net1 will not have to relinquish it before the five years is up. But judging by the active trading by directors it does look as though Net1's own board has given up on hopes of any near-term strengthening in the share price.

On September 19, the same day that Sassa filed a progress report on the status of a new tender process with the Constitutional Court, Belamant sold about 22000 shares at R150 a piece for a total of R3.2-million.

A day earlier Belamant had sold 9000 at R150 for R1.3-million.

But Belamant's biggest sale so far was a week earlier when he sold 289631 Net1 shares on Nasdaq, where the shares were trading at $13.20. The total value of that transaction was $3.8-million. This means that in the past few weeks Belamant has cashed in about R46-million of his stake.

This is a small portion of the more than 2million Net1 shares Belamant owns, but the timing of the sales suggests he is not expecting a sustained recovery in the near term.

Executive director Herman Kotze also cashed in a chunk of shares earlier this month. Among nonexecutive directors, Christopher Seabrooke has been the only significant seller. Since June he has sold a combined R27.5-million worth of Net1 shares.