Ram, Farouk ‘blew’ P30m buying back Choppies
- But share price has moved little - Founders holding nears 40 percent
Founders of Choppies Enterprises Limited, Ramachandran Ottapathu and Farouk Ismail, have injected about P30 million into the Botswana Stock Exchange, The Business Weekly & Review has established.
The two friends and business partners have been on a spending spree, buying shares of the retailer since Choppies was reinstated after a tumultuous period that appears to be behind Botswana’s biggest FMCG dealer. In the course of this outlay, Ram and Farouk increased their share volume by over 24 million and 25 million respectively.
Ram has spent about P14.6 million buying shares of the company that he founded, at 60 thebe a share, while Farouk spent about P15.4 million.
The two set off on this spending spree on 23 October 2020, mopping up 5 million shares each for P3 million each. Farouk bought another stake of 365 000 shares valued at P219 000 on that same day. The second parallel purchase was undertaken five days later when Ram bought the most on that day, gobbling up over 8 million shares for P4.8 million. Farouk increased his volume by over 5 million shares at the value of P3 million.
Another transaction was conducted on 17 December 2020 where the two spend over P10 million combined. The following day, Farouk went back to the market and bought 4 million shares at P2.4 million.
Between 23 October 2020 and 18 December 2020, Choppies shares bought by Ram were worth more than P12 million. Within the same period, Farouk bought shares worth more than P13 million. Two transactions were recorded in April and May this year. On 23 April the two men bought shares worth P1.1 million each. A few days ago, they went back to the market where Ram completed a transaction of shares valued at P748, 738.20 while Farouk purchased shares worth P810 000.
As at June 2019, Ram and Farouk held 254,797,524 shares and 199,939,929 shares respectively, representing 19.55 percent and 15.34 percent. Combined, they accounted for about 35 percent shareholding. Estimates show that Ram now holds 21 percent while Farouk holds 17.3 percent, cumulatively 38.3 percent. According to Choppies 2019 annual report, the third largest shareholder after Farouk was Allan Gray at 14 percent.
Although it is not yet clear who the buyers were, it is believed institutional investors may have been reducing their exposure and Ram and Farouk capitalised on the opportunity because investors are still wary of committing to the retailer.
Combined with delays in releasing financial results on time, this brought the retailer to its knees in 2019, with the share price falling to current levels, costing shareholders millions of losses. The BSE responded by suspending the retailer in order to protect shareholder value.
But Choppies has been returning to profitability after it cut off loss making subsidiaries, most importantly Choppies SA, which was saddling the retailer, and seems to have overcome its controversies and heavy financial losses.