Directors say the move, which could involve P250.1 million for 217 million shares, would also be a signal to investors that Letshego has excess capital and is “therefore attractive to other investors that they should invest in Letshego”. This “could further improve the price of the shares”.
The microlender’s shares on the Botswana Stock Exchange are down eight percent this year and have generally been under pressure in the past three years due to executive changes and shareholder disagreements over the African expansion strategy. Faced with difficulties in parts of Africa and a maturing local business, Letshego’s pretax profits for the year ended December 2023 fell 82% to P121 million. In the year to December 2022, the microlender saw its pretax profits fall 30%.
“The directors have considered the proposed Share Buy-back and the resolutions presented and are of the opinion that they are in the interest of the shareholders,” reads a note circulated to investors.
“The directors recommend that the shareholders vote in favour of the proposed Share Buy-back in terms of the resolutions proposed.”
At the July 26 AGM, Letshego’s board is hoping investors grant a fresh mandate to pursue the share buyback. The mandate granted last August by an Extraordinary General Meeting elapsed without Letshego’s board going ahead with the buyback.
Despite the eight percent drop this year, Letshego’s share price is in far better shape than previous years. In the past three years, Letshego’s share price sank to 88 thebe in early 2021, recovered to a peak of P1.80 in early 2022, before slipping again after the axing of CEO, Andrew Okai that May. The share price reached another low of 98 thebe last July before recovering to P1.28, plateauing, and then slipping again from the beginning of 2024.
Symbolic of the turbulence, Letshego’s share price has shed 20% of its value in the last five years but gained 17% in the last 12 months.
At the AGM, one of the terms being sought for investor approval is that the maximum price which may be paid for each share under the buyback shall be not more than 10% above the weighted average of the market value for the shares for the five business days immediately preceding the date on which the transaction is effected. Letshego has been trading at P1.15 since mid-June.
Major shareholders in the microlender as at December 2023 include Botswana Insurance Holdings Limited and the Botswana Public Officers Pension Fund.
Letshego executives previously told BusinessWeek that securing the mandate for the buyback from investors did not mean the buyback would actually take place.
“Should the buyback resolution achieve majority support from shareholders, this does not infer that the corporate action is guaranteed to proceed, it simply avails a share buyback as an option for Letshego Group’s Executive Committee,” group head of investor relations, Brian Moipone, said previously.
“A share buyback is a corporate action available to listed entities for various reasons, including the increase of shareholder value.
“It enables a listed entity to make an offer to existing shareholders and ultimately reduce the number of shares issued.
“Depending on what proportion of shares is bought back, a shareholders’ stake in the company and the amount they are due from future dividends could increase.”
