Scangroup market value plunges by Sh363m on CEO suspension

Google+ Pinterest LinkedIn Tumblr +

As a result of Friday’s announcement of the suspension of its founder and long-serving chief executive Bharat Thakrar, the WPP Scangroup’s shareholders have lost Sh363 million in paper wealth.

The company board suspended Mr. Thakrar and the chief finance officer Satyabrata Das to pave way for an investigation into allegations of gross misconduct and possible offenses in their capacity as senior executives and employees of the company.

The company’s share price at the Nairobi Securities Exchange (NSE) has dropped by 14 percent since the suspension announcement, having opened trading on Friday at Sh5.94 and closing at Sh5.10 Monday.

This led to the fall of the company’s market capitalization to Sh2.2 billion, from Sh2.56 billion at the close of trading on Thursday.

“There is negative sentiment because people are flying blindly and we still don’t know what the investigations will reveal, so the decline might continue until there is clarity,” a trader who did not want to be named said.

The suspension of the CFO indicates that the allegations could be financial in nature.

More information on the actual reason for kicking out Thakrar will be provided by the company.

“Further announcements concerning this matter will be made when appropriate. For the time being, therefore, shareholders and investors are advised to exercise caution when dealing in the company’s securities,” the firm said in a statement on Friday.

The UK-based conglomerate WPP, which holds a controlling 56.3 percent in Scangroup, is said to have pushed the move to have the CEO suspended concerning its strict ethical code.

Mr. Thakrar, the face of Scangroup since its initial public offering (IPO) in August 2006 was the top shareholder at the time with a 28.53 percent stake. The initial public offering (IPO) raised Sh94 million.

His shareholding has however dropped 10.6 percent, now valued at Sh235 million.

Mr. Thakrar’s potential exit poses a risk to the company if he may build another company that will grow to be a competitor to Scangroup.

Share.

About Author

Anthony Kiratu is the Founder of Finsolutions. He is a financial analyst with over 5 years experience in research, investment advisory, valuation and financial modelling. Anthony is a member of the Institute of Certified Investment and Financial Analysts and Institute of Certified Public Accountants of Kenya. He is passionate about development of African Capital Markets through training of investors and dissemination of information for sound financial and investment decision making process. He is also a part-time lecturer in the Certified Investment and Financial Analyst course in the subjects of International Finance, Portfolio Management, Equity Investment Analysis, and Fixed Income Securities. Email: anthony@finsolutions.co.ke Contact: +254 780216631

Leave A Reply