Stefano Marani, CEO of aspiring helium firm Renergen, once told an interviewer he’d really wanted to pursue acting and studied actuarial science only as a “backup”. It’s probably just as well that he ditched his thespian dream because he can barely conceal his fury at shareholder activist Albie Cilliers.
Last week, Cilliers raised awkward questions about whether Renergen was being honest with investors. He asked whether Marani and co-founder Ryan Otto had been silently cutting their stake. And he pointed out that Renergen’s sponsor for its 2015 listing was Trillian, an advisory firm linked to the Guptas which made a mint out of state capture.
In the middle of this, Renergen issued a panicky stock exchange announcement saying the “recent negativity initiated on social media … has acted as a catalyst to place downward pressure on the company’s share price”.
(Last Thursday, the stock dropped 13.3%, but over a year it’s down 56%.)
Renergen said this was an “opportunistic attack” on the company and it would “consider appropriate next steps”.
Commentators were dubious.
As RECM’s Piet Viljoen asked: “Am I reading this correctly — you are allowed to make hopelessly optimistic statements which might get the share price higher, but you’re not allowed to make negative comments which might drive the share price lower?”
It’s a valid point, illustrating how CEOs come down like a falling piano on any vague criticism but are often happy to endorse any outlandish report predicting a world-beating trajectory.
Cilliers had pointed out how Trillian and its service provider, Integrated Capital Management (ICM) — both of which were mentioned in Raymond Zondo’s state capture report — were the joint lead arrangers for Renergen’s listing.
After its listing, ICM founder Clive Angel even acted as Renergen’s finance director, while at one point Trillian held up to 24% of Renergen’s stock on behalf of investors.
Now, obviously this doesn’t suggest that Renergen is linked to state capture, but it does raise questions over the company it keeps.
Marani, however, describes the criticism as a “distortion and fabrication”.
He says: “Trillian and ICM were the initial book runners for our listing and were never part of our business in any real sense … they were just our advisers, and advisers to many other ongoing capital markets deals at the time.”
Of the 24% holding, Marani says Trillian was simply a custodian of shares which would later be taken up by others, and was never a strategic investor.
So what of Angel, a co-founder of ICM with Stanley Shane, who was a director of Transnet when it was milked of R112m by the Gupta family?
If you’re talking about doing business with any company later implicated in state capture … you’re probably talking about a third of corporate South Africa
— Stefano Marani
Marani responds: “We listed as a spac [special purpose acquisition company], so what usually happens is that you’re given a token CFO until you begin trading. Clive, who came from ICM, was chosen to be that person. And he was immediately removed once we began operating.”
Anyway, he says, this illustrates nothing. “If you’re talking about doing business with any company later implicated in state capture — like McKinsey or KPMG — you’re probably talking about a third of corporate South Africa.”
More pointedly, Cilliers posted documents which show that Otto may have sold out. And Kigeni Energy, which was started by Marani, at one point held up to 20% of Renergen but now has nothing.
As Cilliers tells the FM: “It doesn’t look as if the 40,000 shareholders are aware of what’s going on in the background. If the founders are reducing their interest without telling anyone, that’s a serious issue they ought to be aware of.”
Marani rejects this. He admits Otto has “sold some stock” but says he “remains one of the most significant shareholders”.
He concedes Kigeni’s fund management arm, Clade, bought stock in the 2015 listing then “sold all its shares” in 2017 as the fund was wound up. But he adds: “I wasn’t involved in Kigeni when it bought the stock; I’d already resigned.”
Cilliers says he has “zero” position in Renergen but felt obligated to point out that the story didn’t add up. “This is about due diligence. I believe the shareholders should know more about how this company was founded, and to what extent those who were there at the beginning may have sold.”
Which seems reasonable. So why did Renergen panic into putting out an announcement which contained no specifics anyway?
“We had to do something,” says Marani. “Our shareholders were seeing these questions coming out and they contacted us to verify if it was true. Given the steep movement in the share price last week … we had to try to calm the market.”
Maybe, as The Finance Ghost writes, Renergen as a growth-focused business may be too thin-skinned and prone to taking criticism personally. Or worse, seeing this as the “conspiratorial agenda” of short sellers, intent on driving down the shares to make a profit.
Marani says he’s a capitalist who embraces critical short sellers. “Without short selling, you wouldn’t have derivatives and you wouldn’t be able to hedge, so it’s necessary. But if people purposely misrepresent the truth about a company, and make money off that when the share price falls, you have to correct this.”
That’s true. But equally, part of the reason bad behaviour at companies such as Tongaat Hulett and EOH remained hidden for ages was that nobody took a critical look at those firms.
Which isn’t to say everything is a Steinhoff. But a more routinely sceptical eye would probably only improve our market — and CEOs need to have a thick skin when that happens.
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