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Make out a personal cheque for R207m

That’s what the SRP told Blue’s CEO.

In the biggest director’s deal of the past month, Dave van Niekerk, CEO of Blue Financial Services (JSE:BFS), has bought shares in Blue worth R207m.

Before the Securities Regulation Panel would authorise Blue to make a firm bid for its rival in microfinance, Credit U, or even to go out on road shows looking for institutional support, it wanted assurance that the purchasing parties had the resources to conclude the deal.

Blue, which is a microlender in 12 African countries, offered 44,5 Blue shares for every 100 Credit U. It amounted to a total offer of R278m, half in shares, half in cash. Blue would issue 51,5m share at 540c.

Van Niekerk, who was personally underwriting Blue’s bid was obliged to prove that he had sufficient cash to satisfy the cash consideration of R139,07m.

Van Niekerk was therefore required to buy a R207m single-stock future to underpin the cash half of the transaction. The future expires on September 14. Meantime, Van Niekerk’s own shares in Blue are being held as security.

With shareholders such as AIG, the IFC and Stanlib on board already, he is confident that institutions will step forward to help fund the deal.

The acquisition will virtually double the size of Blue in SA. Credit U has a book of some R280m – virtually equal to the purchase consideration.

It will double Blue’s number of branches in SA and remove a competitor. Because Blue’s stock enjoys a PE multiple of more than 50 and the pricing is so favourable, the transaction would have enhanced diluted headline earnings per share in the year to February by some 36%.

Blue’s most recent results for the year to February underscore just how profitable microlending is. Its loan book doubled to R480m. That brought in interest receipts of R182,7m – which suggests an average loan rate of 38%. Its interest cost rose by 162% to R66m – still only a third of interest earnings.

Blue is a pan-African version of Abil (JSE:ABL). Indeed, Van Niekerk worked at Abil. He confirms that the goal is to get bigger and let higher volumes continue to boost profits even if interest margins reduce over time.

Blue’s results are consolidated at official exchange rates, which might be seen as risky given the Zimbabwe experience and the potential for turmoil in certain areas of operation.

Van Niekerk is not fazed, however. He says Blue can move money quickly and easily between different theatres. Van Niekerk points out that the business thrived before and after the deadly riots earlier this year in Kenya and that Blue’s spread over numerous countries reduces its risk.

Van Niekerk’s right hand man Riaan Swart stepped down earlier this year to focus on his family and game farming. Swart retains the 19% of the equity he had before the CreditU acquisition. Van Niekerk held 18,7% before the deal, AIG 14,8% and Stanlib 11,2%. The latest transaction is bound to affect the relative shareholdings.

Swart’s departure left Van Niekerk as chairman and CEO, which puts the company foul of King 2. The company recently underwent a change of CFO as well.

Blue’s share price has doubled to 665c in the past year. That is well clear of the 540c price at which the new shares are being offered. The PE of 55 shows that subprime lenders in SA are still highly regarded. 

Company

Share

Director

Type

Date

Total

Blue Financial Services Ltd

BFS

Dave Van Niekerk

Buy

12-Aug-08

207,080,000

Eureka Industrial Ltd

EUR

Ronald S Price

Buy

23-Jul-08

107,843,620

City Lodge Hotels Ltd

CLH

Hans R Enderle

Sell

28-Jul-08

60,353,306

Investec Ltd

INL

Bernard Kantor

Sell

22-Jul-08

39,848,000

Allied Electronics Corporation Ltd

ATN

William P Venter

Sell

12-Aug-08

33,928,800

Invicta Holdings Ltd

IVT

A Goldstone

Buy

15-Aug-08

30,550,000

Investec Ltd

INL

Bernard Kantor

Buy

22-Jul-08

26,015,000

Fairvest Property Holdings Ltd

FVT

J F du Toit

Buy

25-Jul-08

21,603,220

Foschini Ltd

FOS

M Lewis

Buy

28-Jul-08

20,363,138

Foschini Ltd

FOS

M Lewis

Buy

25-Jul-08

15,202,571

Anglo Platinum Ltd

AMS

M Valli Moosa

Buy

31-Jul-08

11,166,980

Foschini Ltd

FOS

M Lewis

Buy

31-Jul-08

10,980,000

Group Five Ltd

GRF

Cristina Teixeira

Buy

21-Aug-08

8,568,000

Foschini Ltd

FOS

M Lewis

Buy

06-Aug-08

6,923,095

Foschini Ltd

FOS

M Lewis

Buy

24-Jul-08

6,409,036

Ansys

ANS

Alan Holloway

Sell

29-Jul-08

4,800,000

Alex Forbes P

AFP

Director of a subsidiary

Buy

15-Aug-08

3,369,100

African Dawn Capital Ltd

ADW

M N Ramashela

Buy

18-Aug-08

3,078,000

African Dawn Capital Ltd

ADW

M N Ramashela

Sell

18-Aug-08

3,078,000

Foschini Ltd

FOS

M Lewis

Buy

29-Jul-08

2,878,866

Tiger Brands Ltd

TBS

Director of a subsidiary

Options exercised

30-Jul-08

2,830,779

Foschini Ltd

FOS

M Lewis

Buy

07-Aug-08

2,799,677

Combined Motor Holdings Ltd

CMH

C L Odendaal

Sell

08-Aug-08

2,621,586

AngloGold Ashanti Ltd

ANG

Mark Cutifani

Buy

01-Aug-08

2,412,500

Astrapak Ltd

APK

G Petzer

Sell

15-Aug-08

2,196,000

Beige P

BEGP

Aubrie du Preez

Buy

08-Aug-08

1,935,614

AngloGold Ashanti Ltd

ANG

Srinivasan Venkatakrishnan

Sell

01-Aug-08

1,837,119

TWP

TWP

Nigel John Townshend

Buy

25-Jul-08

1,807,000

TWP

TWP

Steven Dewsbery

Buy

25-Jul-08

1,798,000

Tiger Brands Ltd

TBS

Director of a subsidiary

Options exercised

23-Jul-08

1,784,000

Absa Group Ltd

ASA

Steve F Booysen

Options exercised

20-Aug-08

1,575,450

Stefanutti

SFB

Director of a subsidiary

Sell

18-Aug-08

1,211,000

Beige P

BEGP

Mathys M du Preez

Buy

08-Aug-08

1,106,031

Kumba Iron Ore Ltd

KIO

Vincent Patrick Uren

Buy

24-Jul-08

1,018,258

Afrimat Ltd

AFT

Francois du Toit

Buy

21-Aug-08

862,500

Tiger Brands Ltd

TBS

Director of a subsidiary

Sell

24-Jul-08

853,078

Fairvest Property Holdings Ltd

FVT

J F du Toit

Buy

24-Jul-08

839,150

The Spar Group Ltd

SPP

Roelof Venter

Sell

05-Aug-08

818,850

Blue Financial Services Ltd

BFS

Mpumela J Sondiyazi

Sell

11-Aug-08

808,750

Stefanutti

SFB

Director of a subsidiary

Sell

14-Aug-08

700,000

Miranda Mineral Holdings Ltd

MMH

Alan R Thompson

Sell

12-Aug-08

699,072

Allied Electronics Corporation Ltd

ATN

Director of a subsidiary

Buy

24-Jul-08

690,000

Invicta Holdings Ltd

IVT

A Goldstone

Buy

24-Jul-08

690,000

Alex Forbes P

AFP

Director of a subsidiary

Buy

15-Aug-08

584,705

Hosken Consolidated Investments Ltd

HCI

Yunis Shaik

Buy

05-Aug-08

580,000

Hosken Consolidated Investments Ltd

HCI

Elias Velaphi Mphande

Sell

05-Aug-08

580,000

Naspers Ltd

NPN

Director of a subsidiary

Sell

25-Jul-08

573,448

Merafe Resources Ltd

MRF

D Steve Phiri

Buy

06-Aug-08

526,080

Hosken Consolidated Investments Ltd

HCI

Yunis Shaik

Buy

15-Aug-08

450,000

Hosken Consolidated Investments Ltd

HCI

Elias Velaphi Mphande

Sell

15-Aug-08

450,000

Beige P

BEGP

Aubrie du Preez

Buy

06-Aug-08

415,729

Ellies

ELI

Director of a subsidiary

Sell

14-Aug-08

405,000

Illovo Sugar Ltd

ILV

Director of a subsidiary

Sell

18-Aug-08

403,218

City Lodge Hotels Ltd

CLH

Hans R Enderle

Sell

28-Jul-08

398,554

Kumba Iron Ore Ltd

KIO

Director of a subsidiary

Sell

20-Aug-08

343,650

Remgro Ltd

REM

Josua Malherbe

Buy

08-Aug-08

340,000

Miranda Mineral Holdings Ltd

MMH

Michael Cook

Sell

12-Aug-08

336,791

City Lodge Hotels Ltd

CLH

Clifford Ross

Buy

28-Jul-08

312,835

African Brick

ABK

Benoni van Graan

Buy

28-Jul-08

267,500

African Brick

ABK

Benoni van Graan

Buy

30-Jul-08

264,375

Resilient Property Income Fund Ltd

RES

Des De Beer

Buy

19-Aug-08

262,500

Omnia Holdings Ltd

OMN

N K H Fitz-Gibbon

Buy

31-Jul-08

257,496

Beige P

BEGP

Mathys M du Preez

Buy

06-Aug-08

237,553

City Lodge Hotels Ltd

CLH

Clifford Ross

Buy

14-Aug-08

234,750

Miranda Mineral Holdings Ltd

MMH

Ronald John Nel

Options exercised

12-Aug-08

233,241

City Lodge Hotels Ltd

CLH

Frank W J Kilbourn

Sell

28-Jul-08

228,180

African Dawn Capital Ltd

ADW

C d W Vivier

Buy

22-Jul-08

220,000

African Brick

ABK

Benoni van Graan

Buy

01-Aug-08

200,640

PSG Group Ltd

PSG

Willem Theron

Buy

11-Aug-08

180,500

Kumba Iron Ore Ltd

KIO

Vincent Patrick Uren

Buy

24-Jul-08

179,693

Allied Electronics Corporation Ltd

ATNP

Director of a subsidiary

Sell

01-Aug-08

179,690

Ellies

ELI

Raymond Hillard Berkman

Buy

25-Jul-08

177,000

Pretoria Portland Cement Company Ltd

PPC

O Fenn

Options exercised

22-Jul-08

175,722

City Lodge Hotels Ltd

CLH

A C Widegger

Sell

28-Jul-08

171,135

Investec Ltd

INL

Ian R Kantor

Sell

11-Aug-08

169,249

Peregrine Holdings Ltd

PGR

Director of a subsidiary

Buy

29-Jul-08

166,650

Telematrix

MIX

Stefan Joselowitz

Sell

22-Jul-08

159,600

Telematrix

MIX

Stefan Joselowitz

Buy

22-Jul-08

159,600

Beige Holdings Ltd

BEG

Yaseen Bhayat

Buy

12-Aug-08

147,000

Mr Price Group Ltd

MPC

Shane van Niekerk

Sell

15-Aug-08

138,960

Beige P

BEGP

Aubrie du Preez

Buy

08-Aug-08

133,416

Beige P

BEGP

Mathys M du Preez

Buy

08-Aug-08

133,416

Spanjaard Ltd

SPA

B L Montgomery

Buy

14-Aug-08

125,000

Illovo Sugar Ltd

ILV

Director of a subsidiary

Options exercised

18-Aug-08

124,146

Brikor

BIK

G van Niekerk Parkin

Buy

23-Jul-08

111,940

The Spar Group Ltd

SPP

Roelof Venter

Options exercised

05-Aug-08

108,438

Ideco

IDE

Vhonani Mufamadi

Buy

23-Jul-08

101,645

Cadiz Holdings Ltd

CDZ

Ram Barkai

Buy

21-Aug-08

99,956

Investec plc

INP

Ian R Kantor

Sell

11-Aug-08

98,619

Omnia Holdings Ltd

OMN

N K H Fitz-Gibbon

Buy

31-Jul-08

96,689

Merafe Resources Ltd

MRF

Con J Fauconnier

Buy

08-Aug-08

96,000

The Spar Group Ltd

SPP

R W Coe

Options exercised

05-Aug-08

90,706

Wescoal Holdings Ltd

WSL

Designated advisor

Buy

01-Aug-08

90,000

Wescoal Holdings Ltd

WSL

Designated advisor

Buy

31-Jul-08

90,000

Set Point Technology Holdings Ltd

STO

Mark J Smith

Buy

22-Jul-08

90,000

Wescoal Holdings Ltd

WSL

Andre Russell Boje

Buy

04-Aug-08

80,000

Convergenet

CVN

Gordon Stanley Edwards

Buy

22-Jul-08

76,757

Kimberley Consolidated

KCM

Hein Puren le Riche

Buy

13-Aug-08

70,970

Miranda Mineral Holdings Ltd

MMH

Alan R Thompson

Buy

15-Aug-08

66,000

Miranda Mineral Holdings Ltd

MMH

Ronald John Nel

Buy

15-Aug-08

65,500

Ellies

ELI

Raymond Hillard Berkman

Buy

14-Aug-08

62,790

Beige Holdings Ltd

BEG

Ian Black

Buy

12-Aug-08

60,000

Brikor

BIK

Garnett Parkin (Junior)

Buy

24-Jul-08

54,084

All Joy Foods Ltd

ALJ

Maslamony T Pather

Options exercised

08-Aug-08

50,000

Set Point Technology Holdings Ltd

STO

Christopher S Seabrooke

Buy

28-Jul-08

48,600

Aquarius Platinum Ltd

AQP

Nicholas T Sibley

Buy

07-Aug-08

47,400

BSI

BSS

N G Payne

Buy

21-Aug-08

44,129

Brikor

BIK

Designated advisor

Buy

23-Jul-08

38,563

Ideco

IDE

Malose F Kekana

Buy

23-Jul-08

34,980

Kumba Iron Ore Ltd

KIO

Director of a subsidiary

Options exercised

20-Aug-08

33,060

Set Point Technology Holdings Ltd

STO

Mark J Smith

Buy

22-Jul-08

31,356

Beige P

BEGP

Aubrie du Preez

Buy

06-Aug-08

28,655

Biege P

BEGP

Mathys M du Preez

Buy

06-Aug-08

28,655

PSG Group Ltd

PSG

Johannes F Mouton

Buy

11-Aug-08

28,500

Kimberley Consolidated

KCM

Hein Puren le Riche

Buy

23-Jul-08

28,500

Kumba Iron Ore Ltd

KIO

Vincent Patrick Uren

Buy

25-Jul-08

27,930

Metmar Ltd

MML

Company secretary

Buy

01-Aug-08

27,150

Allied Electronics Corporation Ltd

ATNP

Director of a subsidiary

Options exercised

01-Aug-08

26,954

Mondi Plc

MNP

Peter Oswald

Buy

30-Jul-08

25,300

Spanjaard Ltd

SPA

R J W Spanjaard

Buy

21-Aug-08

24,840

African Eagle

AEA

Euan Arthur Worthington

Buy

23-Jul-08

22,500

ConvergeNet

CVN

Hanno Van Dyk

Buy

06-Aug-08

21,407

ConvergeNet

CVN

Hanno Van Dyk

Buy

11-Aug-08

17,400

Kimberley Consolidated

KCM

Hein Puren le Riche

Buy

31-Jul-08

17,150

Nictus Ltd

NCS

N C Tromp

Buy

14-Aug-08

13,063

Kimberley Consolidated

KCM

Hein Puren le Riche

Buy

29-Jul-08

13,000

ConvergeNet

CVN

Hanno Van Dyk

Buy

11-Aug-08

11,700

ConvergeNet

CVN

Hanno Van Dyk

Buy

07-Aug-08

11,500

Beige P

BEGP

Lionel I Karp

Buy

08-Aug-08

11,204

Conduit Capital Ltd

CND

Stanley D Shane

Buy

29-Jul-08

11,000

Amalgamated Electronic Corporation  Ltd

AER

Derrick Alexander

Buy

11-Aug-08

10,000

Alex Forbes P

AFP

Director of a subsidiary

Buy

15-Aug-08

9,592

Beige P

BEGP

Mark M Di Nicola

Buy

08-Aug-08

8,571

All Joy Foods Ltd

ALJ

Stanley Fanaroff

Options exercised

08-Aug-08

7,150

Amalgamated Electronic Corporation  Ltd

AER

Derrick Alexander

Buy

05-Aug-08

6,608

Lonmin plc

LON

Brad Mills

Buy

19-Aug-08

6,588

Combined Motor Holdings Ltd

CMH

C L Odendaal

Sell

08-Aug-08

6,494

Kimberley Consolidated

KCM

Hein Puren le Riche

Buy

18-Aug-08

6,240

African Eagle

AEA

Geoffrey W Cooper

Buy

22-Jul-08

6,000

ConvergeNet

CVN

Hanno Van Dyk

Buy

07-Aug-08

5,800

Kimberley Consolidated

KCM

Hein Puren le Riche

Buy

19-Aug-08

5,760

Kimberley Consolidated

KCM

Hein Puren le Riche

Buy

21-Aug-08

5,625

City Lodge Hotels Ltd

CLH

I Nigel Matthews

Sell

28-Jul-08

5,552

Stratcorp Ltd

STA

Company secretary

Buy

13-Aug-08

4,950

Set Point Technology Holdings Ltd

STO

Christopher S Seabrooke

Buy

14-Aug-08

4,446

Beige P

BEGP

Lionel I Karp

Buy

08-Aug-08

3,734

African Eagle

AEA

Bevan John Metcalf

Buy

24-Jul-08

3,000

Beige P

BEGP

Lionel I Karp

Buy

06-Aug-08

2,406

Allied Electronics Corporation Ltd

ATNP

Director of a subsidiary

Sell

31-Jul-08

2,310

Beige P

BEGP

Mark M Di Nicola

Buy

06-Aug-08

1,841

ConvergeNet

CVN

Hanno Van Dyk

Buy

06-Aug-08

1,184

Beige P

BEGP

Lionel I Karp

Buy

06-Aug-08

803

City Lodge Hotels Ltd

CLH

Director of a subsidiary

Sell

28-Jul-08

608

Kimberley Consolidated

KCM

Hein Puren le Riche

Buy

15-Aug-08

480

Allied Electronics Corporation Ltd

ATNP

Director of a subsidiary

Options exercised

31-Jul-08

347

Mondi Ltd

MND

Company secretary

Buy

07-Aug-08

125

Mondi Ltd

MND

David A Hathorn

Buy

07-Aug-08

125

 

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COMMENTS   3

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Between 7/12/2007 and 17/01/2008 the two directors,Swart and Van Niekerk bought 7 494 966 shares in the market according to Moneyweb stats.According to this article 63.7% of the shares are held by Swart(19%),Van Niekerk(18.7%),AIG(14.8%) and Stanlib(11.2%).The funds holding this share according to moneyweb are Coris Capital General Equity(118200),Stanlib Small Cap(2289400) and Stanlib Value Fund(13000000). Now Van Niekerk is writing a cheque for a SSF worth 31million shares. The operating income increased by 124% but the expenses increased by 164%.The share issuance increased by 35%.The net asset value of the share is R1.34 and the Tangible asset value per share is R0.55. According to the JSE stats ,PE at 57.25,EY at 1.75 it makes a profit of -R61million and it pays no dividend. Where is the value in this share or am i missing something?Is the only value in a share price increase………so maybe it goes to R10?? Sjoe………FIRSTRAND looks dead cheap at R15. Please help explaining this share……………………………..!

According to Moneyweb stats Swart and Van Niekerk bought 7 494 966 shares between 7/12/2007 to 17/01/2008.According to this article 63.7% of Blue shares are in the hands of Swart(19%),van Niekerk(18.7%),AIG(14.8%) and Stanlib(11.2%).Funds holding this share according to Moneyweb stats are Coris Capital Equity Fund(118200),Stanlib Small Cap Fund(2289400) and Stanlib Value Fund(13000000). On the 12/08/2008 van Niekerk takes up a SSF to the value of 31 000 000 shares. Operating income up by 124% but operating expenses up by 164%.Headline earnings increased by 39% but share issuance increase by a whopping 35%.The net asset value of the share is only R1.34 and the Tangible asset value only R0.55. According to JSE stats the PE of the company is 57.25 and the EY 1.75 and the company pays no dividend! The companies profits -R61 million. My question :Where is the value of this share relating to the stats mentioned above?Is it only in a share price increase or what? Someone please explain this to me! Firstrand looks dead cheap to me at R16.00 with relation to this share…………..so does Didata,Abil,Billiton,Mittal ect ect ect ect. Please help,and please don’t delete my question again!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

The high PE, P/B etc implies a very high growth rate (in absolute terms and also relative to the other shares you mention). After doing my own analysis, I think that the growth rate in EPS for the next few years will be below expectations – caveat emptor at these prices… Taking this argument further, BFS could be a prime candidate for shorting. You have a fundamental valuation way below the current share price and you know that Van Niekerk will get a margin call over R200m of stock if the price drops by around 25%. Add to that any big redemptions out of the units trusts and you’ve got yourself a meltdown! PS Why would I share this view and not just quietly profit from it myself? Because I can’t get my hands on stock to borrow for a short sale!

End of comments.

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