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Viceroy’s traction is Ramaphosa’s challenge

South Africa’s reputation for insalubrious dealings under Zuma makes it fertile ground for maverick short-sellers.


South Africa's new president Cyril Ramaphosa

Viceroy Research is little more than a blog, a googlemail account and a handful of connections in the hedge fund world.

But the activist short seller has managed to make some noise in another South African attack after its successfully vocal short on local retail group Steinhoff International Holdings. 

Amid all the talk of state capture under former president Jacob Zuma and strange accounting at Steinhoff, investors have started to question even the country’s most-respected institutions and businesses.

Few financiers who know Viceroy’s latest target, Capitec Bank, really fear for its financial standing. It is highly profitable and has a core equity ratio above 30%. Retail banking experts around the world admire its business model. 

Many in the local and international financial community think South Africa’s banking sector as a whole is as sophisticated and well-run as any in either the emerging or developed markets.

No one, of course, is suggesting business links between Capitec and Steinhoff or Zuma, or any specific support from his administration for these businesses. Steinhoff’s problems with its international acquisitions seem largely of its own making. 

Damning report

Even so, Viceroy’s damning report on Capitec, including its doubts about the bank’s provisioning, play on wider perceptions of woeful governance and transparency in South Africa. 

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