The recent collapse of the South African diversified company, Steinhoff, following revelation of a tax investigation by Germany authorities, could directly or indirectly affect Namibia, analysts have said.
Steinhoff has seen a more than 87 percent drop in share price and more than US$14 billion wiped off its market value since last week following the disclosure of accounting irregularities in the company and the exit of its Chief Executive Officer, Markus Jooste.
“There would have been exposure to Steinhoff, but I doubt that it made up such a large weighting so as to cause great concern for the industry as a whole. However, the knock-on effects on banks and other related companies should also be looked at as these assets have also lost value as a result of Steinhoff’s collapse,” Eric van Zyl, Head of Research at IJG said.
He said the full effects and range of consequences of Steinhoff’s collapse would take some time to come to light.
“Namibian pension funds should be well diversified and contain offshore assets, fixed income assets, unlisted assets, Namibian equity, and dual listed equity, most of which should be largely unaffected by Steinhoff’s collapse.”
He, however, said the different funds would be more or less affected depending on the manager’s specific view on Steinhoff.
Eloise du Plessis, an Analyst at PSG Namibia said brands under Steinhoff, which are known to Namibians include, Incredible Connection, HiFi Corp, Hertz Car Rental, Timbercity, Pep Stores, Dunns, Shoe City, Pennypinchers, Tekkie Town and Ackermans.
“It has holdings in Namibian companies as well. Steinhoff International Holdings controls the following trading entities, Namib Foam (Pty) Ltd, PG Bison Namibia (Pty) Ltd, Unitrans Namibia Holdings (Pty) Ltd, Jordan Shoes, Glodina and Industrial Footwear,” she said. “The current issues relate to the holding company and we do not have much information at this stage how it will affect the underlying operating entities,” said Du Plessis.
She said in terms of the impact on investors in Steinhoff, most pension funds would have had some exposure to the stock since it was in the Top 40 index on the JSE.
Du Plessis pointed out that pension fund portfolios are diversified as a regulatory requirement, so the decline in one stock will not erode an entire fund.
“Pension funds are not allowed to have more than 75 percent in equities and not more than 10 percent in one stock. So even though it would have an effect on portfolios, it would not destroy all savings. Given that the JSE had an overall increase, the impact will more than likely be seen in the performance of the funds,” she said.
Investec, which also has operations in Namibia, said it has credit exposures to the Steinhoff Group of companies, which represent a small portion of the group’s balance sheet.
Namibian pension funds declined to comment on whether the collapse has affected their assets.
“Your query is well received, however, we are unable to respond to your query as both the GM: Investments and CEO are currently on leave,” said Daylight Ekandjo, Manager Stakeholders’ Engagement at the Government Institutions Pension Fund.
Tjivi Mbuende of Namibia Asset Management said the company had no comment on the matter.
Reuters reported this week that Steinhoff is considering selling stakes worth a combined US$1.4 billion in South African companies PSG Group and KAP Industrial to help plug a liquidity gap at the retailer, Both PSG and KAP operate in Namibia.