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JOHANNESBURG (Capital Markets in Africa) – African Phoenix Investments Ltd., the holding company resurrected from the remnants of failed African Bank Investments Ltd., started trading 30 months after being suspended, with volumes far exceeding all other shares on the Johannesburg Stock Exchange.
The securities started trading at 55 cents, before falling to 50 cents as of 10:19 a.m. in Johannesburg, giving the company a market value of 751 million rand ($56 million). Almost 24 million shares changed hands compared with about 1.3 million each for Italtile Ltd. and Steinhoff International Holdings NV, the next most traded stocks.
African Bank Investments, known as Abil, was suspended at 31 cents when it collapsed in August 2014 after soured loans surged and the company struggled to raise more funding. Shareholders at the time of the takeover by regulators included Coronation Fund Managers Ltd., the Public Investment Corp., Stanlib Ltd. and Allan Gray Ltd.
“A lot of people are exiting old trades they were holding,” Rob Pietropaolo, a trader at Unum Capital said, adding that his company wouldn’t buy any of the securities. “The stock was expected to open at 0.39 rand and managed to spike to 0.55 rand. There’s probably a lot of short covering going on and those who were caught long are now getting out.”
African Phoenix has about 1.8 billion rand in cash and its sole asset is Standard & General Insurance Co. The insurance unit, which used to write policies for Abil’s clients, is winding down its book. African Phoenix is expected to announce its new strategy this quarter. Abil’s bad debts are still held in a vehicle called Residual Debt Services while its viable assets were rescued and started trading as African Bank Ltd. in April.