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Karooooo – formerly Cartrack – resurfaces on the JSE as a secondary listing

Karooooo – formerly Cartrack – resurfaces on the JSE as a secondary listing

SIMON BROWN: I’m chatting with Zak Calisto. He is the CEO of Karooooo. If you’re wondering who Karooooo is, they were Cartrack, they are listed on the Nasdaq and now they’re listed back on the JSE, starting life on Wednesday as a secondary listing on the JSE. Zak, I appreciate your time today. First question, why that move from a JSE primary listing to a Nasdaq primary, then a secondary on the JSE?

ZAK CALISTO: Well, to release the company that I own my shares in, Cartrack, and Karooooo owns 68% of the shares, we needed to have access to capital markets, and we believe the Nasdaq is a good place in order to raise cash for future growth. We also needed a broader spectrum of shareholders and funds that we could tell our story to, which the Nasdaq allows us to do. And we’ve seen our share appreciate overtime over the last 18 months or so, given that everybody knows that the market we would be moving to, the Nasdaq, is a primary listing.

And in our primary listing, we raised in the region of R500 million, which is sufficient at this point in time for our immediate needs and short-term needs in terms of investing in R&D and future growth. And we are certainly waiting for Covid to calm down a bit so that we can really grow our business – not that we can complain at this point in time, because our subscriber numbers have increased substantially, specifically in the last two quarters, which is in the last six months.

SIMON BROWN: So the Nasdaq is up and trading, and you mentioned capital markets. The Nasdaq is massively giant compared to our JSE. How many of the JSE investors followed through on the scheme and ultimately remained invested?

ZAK CALISTO: That was 99%. So we were very well supported by our shareholder base and 99% of the shareholder base voted in favour of the scheme and remained invested. Only 1% of the shareholders opted to receive cash.

SIMON BROWN: My anecdotal evidence speaking, I couldn’t find anyone who took the cash. Everyone was moving along. The shares trading on the JSE – is it a one-for-one with the Nasdaq? In other words, take the Nasdaq price, multiply it?

ZAK CALISTO: It’s actually a 10-for-one. We are just putting out the Sens announcement at this point because there appears to be some confusion where maybe certain brokers or banks aren’t aware of the prospectus, and we did see shares trade at R65, which is in our opinion potentially a misunderstanding where a lot of the shareholders perhaps don’t actually know that 10 Cartrack shares is one Karooooo share.

SIMON BROWN: Gotcha. I thought so. As we are recording this Wednesday lunchtime, because you’re in Singapore, there’s a volatility auction for an uncross at around a R500. So, as you say, there does seem to have been some confusion there.

You’re now on the Nasdaq primary listing. I suppose you’re not going to be reporting in US dollars and you will probably also, I imagine, be moving to quarterly reporting at the same time.

ZAK CALISTO: No. We will continue to report in rand. The reason we’ve chosen to continue to report in rand – unless we see a reason otherwise we will change – is 70% of our business is still in South Africa. And the volatility of the exchange rate will just play havoc with our results. I think American shareholders or European shareholders or Japanese shareholders who invest in Cartrack will know it’s a 70% rand asset. And I think the transparency of our reporting in rands allows them to hedge against any perceived risk in the rand.

SIMON BROWN: I take your point on that. The majority of the revenue – keep it in Zar (rand). You mention 70% is in South Africa, but you’re operating in a number of countries these days. How many markets are you in?

ZAK CALISTO: Twenty-three countries, and we are clearly growing our business outside South Africa, fostered in South Africa. But in South Africa, we continue to grow at very healthy rates. We certainly would like to grow even faster, if we can.

And we at this point in time have in the region of 2 000 employees in South Africa, about 1 000 employees outside South Africa, so we have over 3000 employees. And we’ve got 350 vacancies just in South Africa at this point in time.

SIMON BROWN: You mentioned Covid upfront. Obviously, some of the markets you’re operating in are well ahead with their vaccine, other markets such as South Africa, are just starting on that. But as a business is Covid something which is now almost in one degree, you’re learning to manage it and work within it, and you’re kind of seeing that light at the end of the tunnel?

ZAK CALISTO: Well, we are hopeful, and we believe that given the vaccine – and all the countries are rolling the vaccine – hopefully in 12 months’ time we would have forgotten what it’s like to walk around with masks.

SIMON BROWN: When we can walk around, we can suddenly go on holidays and take road trips and the like again.

We’ll leave that there. That was the CEO of Karooooo, Zak Calisto. As I said, Karooooo was Cartrack. They’ve come back on. There were some odd trades early Wednesday morning, but that seems to be correcting itself as we record. Zak, appreciate the time.

Listen to Thursday’s full MoneywebNOW podcast here

Karooooo – formerly Cartrack – resurfaces on the JSE as a secondary listing

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