Investors in JD Group had an uncle in the share-price business yesterday. The furniture retailer, which owns Joshua Doore, rallied by as much as 6.9% to R24 a share.
JD Group, controlled by Steinhoff International, gained as investors took heart from the sale of its lending unit.
JD announced late on Monday that it had agreed to sell the division to an international consumer-finance provider in a deal that will reduce its future funding requirements.
"JD Group doesn't want to fund the book and this allows it to focus on its retailing and product range," said Mark Hodgson, an analyst at Avior Capital Markets.
"It won't necessarily restrict lending to consumers any more than JD Group would have if it had kept the business."
The transaction gives a boost to the unprofitable company, which has struggled with rising bad debt in its consumer-finance operation and raised about R1-billion in a rights offer earlier this year.
The offering was underwritten by furniture maker Steinhoff, which now owns about 86% of JD Group.
Ellerine Holdings, another furniture retailer, which was owned by African Bank Investments Limited, applied for business rescue last month .
JD shares closed 2.5% higher at R23, the highest in two weeks, after falling 21% this year.
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