Steinhoff continues to be the nightmare that JSE-listed Pepkor Holdings just can’t wake up from. After a year of legal battles to release the R9 billion raised from the sale of 500 million Pepkor shares in June 2024, the South African Reserve Bank (SARB) has once again tightened its grip on Pepkor.
This week, Pepkor – the owner of retail brands such as PEP, Ackermans, and Tekkie Town – told shareholders via SENS that Ainsley Holdings has been prohibited from dealing in Pepkor shares, valued at about R12.5bn, as the SARB continues to investigate Steinhoff, now known as Ibex RSA Holdco Limited.
Ainsley is a wholly owned indirect subsidiary of United Kingdom-based Ibex, the entity that took over Steinhoff’s assets and liabilities following its liquidation in 2023.
Ainsley holds more than one billion Pepkor shares, or 28.2% of Pepkor’s issued shares.
In the SENS, Pepkor said Ainsley informed it on 11 March that the SARB had issued orders under Regulation 22C(2)(b) of the Exchange Control Regulations to block dealings in 506 million of its Pepkor shares, representing 13.7% of Pepkor’s total issued shares.
The Exchange Control Regulations empower the SARB to freeze transactions where it suspects breaches of the exchange control laws.
For the past two years, Ibex and its subsidiaries have participated in intense legal action in an attempt to lift SARB blocking orders as Ibex tries to unlock funds or sell assets to pay creditors.
Read: SARB unfreezes R9bn: a win for Ibex Holdings in settling foreign debts
Rob Rose, the author of Steinheist, told Stephen Grootes on CapeTalk’s Money Show that the SARB’s latest block on Pepkor shares owned by Ainsley is linked to the Steinhoff fraud uncovered in 2017.
Pepkor, established in 1965 by South African entrepreneur George Linder, came under Christo Wiese’s ownership in 2002. In 2014, Wiese sold Pepkor to Steinhoff in a R62.8bn deal. This transaction gave Wiese a 20% stake in Steinhoff.
At the time, the sale appeared to be a stroke of genius. Pepkor was integrated into Steinhoff’s global platform, and Wiese became the chairman of the international retailer, which expanded its footprint across Europe and Australia. However, the paper wealth – estimated at R85bn for Wiese – vanished in December 2017 when Steinhoff’s collapse was triggered by chief executive Markus Jooste’s resignation and revelations of massive accounting fraud. The scandal wiped billions off Steinhoff’s market value, devastating Wiese’s stake.
Since then, Wiese has fought to recover his losses, filing a R59bn lawsuit against Steinhoff, alleging he was misled during the Pepkor transaction and subsequent events. This litigation is ongoing.
Pepkor again became a standalone company following Steinhoff’s troubles. However, Ibex is still one of Pepkor’s largest shareholders.
Rose explains that the SARB believes various laws, including the exchange control regulations, were breached in the transactions leading to Steinhoff’s purchase of Pepkor and its 2015 listing in Germany.
“A year after the deal, Steinhoff listed in Germany. To do this, Jooste had to make various claims to the Reserve Bank about the accuracy of its financials. We now know that Markus Jooste had systematically manipulated the financial statements. It was a complete fiction – R106bn in fictitious transactions over more than a decade. Steinhoff submitted these false financials to the Reserve Bank, and based on this, it was allowed to take money out of the country. That’s dubious at best.”
Rose explains that, from the SARB’s perspective, until they fully understand what happened and how the law was broken, Steinhoff and its successor, Ibex, will be prohibited from selling Pepkor shares.
“It does mean that Pepkor has been sort of stuck in this sort of nightmare, hangover, for the last seven, eight years.”
If Ibex and subsidiaries remain true to form, this latest block on Pepkor shares is likely to lead to another legal battle.
“Steinhoff challenged the Reserve Bank on various other tranches of shares that it had frozen, and that case was eventually settled. So, you can imagine that it would definitely look to challenge this as well.”
Rose adds that, at the very least, Ibex could urge the SARB to expedite its investigation and clarify the situation, because they cannot afford to remain stuck.
“Steinhoff still has debt that it needs to pay, massive debts, which is why, ultimately, the company failed. They need to repay the creditors, so it can’t just be stuck in this limbo – it’s purgatory – for so many years.”
