Steinhoff fallout just cost Christo Wiese R28 billion in a day

Following Tuesday evening’s announcement that Steinhoff would not be publishing its financial results due to allegations of accounting fraud, South African billionaire and chairman of the company Christo Wiese has seen his net worth halved.

Retail tycoon Wiese, who owns 23% of Steinhoff, was named as the fourth richest person in South Africa with a net worth $5.5 billion of according to a January 2017 report by Forbes.

This amount was nearly halved on Tuesday as shares in the company dropped to R17.56, a loss of R28.09 or 61.53%, shortly after the JSE opened.

According to Forbes’ real-time tracker, Wiese lost $2.1 billion (R28.3 billion) by 11:40AM on Wednesday. This equates to a loss of 54.2% of his total net worth since 5PM EST on Tuesday (midnight local time).

Bloomberg’s billionaire data shows that the Wiese’s wealth has taken a nosedive in the past week – with the billionaire losing $1.6 billion year-to-date. Bloomberg’s data has not been updated to reflect the events of the past 24 hours, reflecting changes to 5 December 2016.

Steinhoff was due to publish financial results on Wednesday, however that has been postponed because of accounting irregularities. Fund manager at Ashburton Investments, Wayne McCurrie said in a note on social media: “The effect must be material and can be a serious drag on the company and its reputation for years”.

Chief executive officer Marcus Jooste resigned with immediate effect on Tuesday after the global furniture and clothing retailer reported irregularities in its accounts that require further investigation.

The owner of the France-based Conforama furniture store chain and Pep clothing stores in Africa has appointed auditor PwC to probe the matter, it said in a statement on Tuesday.

“Steinhoff will update the market as the aforesaid investigation proceeds. The Company will publish the audited 2017 consolidated financial statements when it is in a position to do so. In addition, the Company will determine whether any prior years’ financial statements will need to be restated,” it said.

Bloomberg reported that the findings mark a striking turnabout for Wiese, who’s taking over the CEO role on an interim basis.

Since he bought into the company in 2014, he’s accelerated an acquisition drive alongside long-term ally Jooste, who has been with the retailer since 1988.

“The trust between Wiese and Jooste is broken, that is why Jooste is out,” Syd Vianello, an independent retail analyst in Johannesburg, told Bloomberg by phone. “Wiese has got a huge amount of money at stake and it’s in his best interest to ensure trust in the company is restored.”

The turmoil has implications for Steinhoff Africa Retail, which was spun off from its parent in September, and Shoprite, in which Wiese is also the biggest shareholder.

Steinhoff Africa slumped as much as 29% in Johannesburg, while Shoprite plunged as much as 6.3%, the biggest fall in almost a year. Steinhoff Africa said CEO Ben la Grange, who’s also chief financial officer of Steinhoff International, resigned.

“I doubt Steinhoff will collapse,” Owen Nkomo, CEO of Johannesburg-based money manager Inkunzi Wealth Group, told Bloomberg by phone. “I would much rather take a chance and buy Steinhoff than Bitcoin.”

You can find the real-time tracker here


Read: Steinhoff shares fall 61% on opening after CEO resigns amid ‘irregularities’

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