Technology firm iOCO has begun the process of buying back 1.8-million of its own shares as part of an effort to boost shareholder value. The firm is one of the JSE’s best-performing tech stocks so far this year.
On Friday, the group — formerly EOH — told shareholders that through a wholly-owned subsidiary it had entered into a share repurchase programme in terms of which it may buy back up to a maximum of 1.8-million ordinary shares.
The company received the authority to make this move by its shareholders at a general meeting held on May 23.
In April, the group’s co-CEO Rhys Summerton told Business Day: “As soon as we have shareholder approval, we want to utilise available cash to pay down debt and do share buybacks.”
By reducing the number of outstanding shares, a company increases its earnings per share, which often translates to a higher stock price. This is particularly attractive when management believes the shares are undervalued.
When a company announces a share buyback, it can signal to the market that management is confident about the company’s future prospects.
iOCO will also be hoping to add to the positive momentum in the stock so far in 2025.
Year to date, the share is up 72.24%, ending Friday with a gain of 0.72% to R4.22, giving the company a market value of R2.69bn.
While doing well, this is a far cry from the lofty heights of over R100 a share that the company once commanded.
The technology group has been lauded for the restructuring of its business, underscored by an intense approach to shareholder activism, and recently reporting its first interim profit in three years.
Ravaged by scandal, the company has made a concerted effort to salvage its reputation following allegations of malpractice and tender irregularities under earlier leadership.
Disillusioned with the resulting erosion of value at the once-thriving tech firm, shareholders initiated a plan aimed at revitalising it in 2024. The strategy includes expanding the iOCO and international unit, cutting unnecessary costs and changing leadership if required.
iOCO said it had “assessed its capital structure and current cash position and believes that repurchasing shares represents an efficient use of capital that will enhance shareholder value”.
The repurchase programme began on Friday and will run for a maximum of six months.
In terms of the programme, shares will be repurchased at a price “not greater than 10% above the volume weighted average trading price of iOCO shares over the five business days immediately preceding any particular repurchase”.
It also said the programme “may be discontinued at any time”.
In recent times, a number of JSE players, including Momentum, Metropolitan, Karooooo, Old Mutual, Glencore, Netcare and Ninety One have been buying up their own shares — a sign they see their stock is undervalued.
Perhaps the largest example of this is the Naspers stable, which launched a buyback programme in 2022 after winding down an unpopular cross-shareholding structure with Prosus. That programme has created more than $32bn (R577bn) in value.
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