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“PSST... DO YOU want an investment where you can get 100% capital growth over a period of five years – plus a dividend of 12,5% a year to boot?” Finweek is willing to bet investors in and around Pretoria are about to start hearing that pitch over the next few weeks and – with us having quite a good track record of warning investors against products such as those offered by the likes of Edwafin, Sharemax and King Financial Holdings – we decided to walk investors through some of the red flags that waved wildly in our heads.
The product being pitched through Lekgotla Financial Services is a preference share in a company called Escalator Capital Ltd. Lekgotla is a registered financial services firm listed with the Financial Services Board (FSB) and trades under the number attached to its marketing material.
The compliance officer for Lekgotla is Askari Compliance Services CC. A compliance officer is a good start, but when your main listed number is to a cellphone that might be a concern, especially when it’s offering compliance for 25 different businesses but only has a single listed compliance officer, in the form of Warren Neale.
With the Companies and Intellectual Property Registration Office (Cipro) still having serious question marks about its systems, we didn’t think too much of the fact that neither Lekgotla nor Escalator Capital appear on an online search. However, that would in the normal course of business be a good thing to check before committing any money to a venture.
The next area to consider is the promises being made. Investors will be pitched the idea of a 12,5% dividend tax free, which sounds very attractive – especially if coupled with a 100% capital gain over a five-year period. To put that in context, investors on the JSE know a good dividend yield would be between 4% and 6%. Even property unit trusts are delivering 8% and 10% and those are still subject to tax.
It’s not impossible but it takes some doing. But that means making quality cash generative investments.
Escalator’s website states: “The Equity Fund invests in companies that can provide adequate security on invested capital and that have a proven financial track record.”
Considering its first investment is in JSE-listed journeyman John Daniel Holdings, which is battling to shuffle R1m in debt, questions have to be asked about who picked that investment.
The real flags go up when investors check out the board of directors at Escalator Capital. Executive director Johan Coetzee talks up the various listed businesses he’s been involved in. Those read like a veritable train wreck and include Billcad, Blue Financial Services (BFS) and Beget. Various other directors have ties to BFS along the way in various financial capacities.
Coetzee is also listed as one of the founders of Lekgotla, along with Danie Calitz, with Henry Ansara also listed as a key individual. Similarly, various directors also are involved with Selex – the company that provides “secretarial, corporate advisory and corporate governance responsibilities of Escalator Capital”.
Finweek battles to see how either Calitz or Ansara could be listed as non-executive directors when they’re also involved in the broking of the Escalator Capital product to investors. All three gentlemen also sit on the audit committee, giving little or no independence to the board.
And 28-year-old financial director Michael Drummond is also credited with being appointed at BFS “to implement additional accounting and reporting systems to trace and detect fraud to improve integration between systems and forecast modelling”.
While we’re in no position to pass judgment on a potentially lucrative investment, our eyebrows are definitely raised.
The product being pitched through Lekgotla Financial Services is a preference share in a company called Escalator Capital Ltd. Lekgotla is a registered financial services firm listed with the Financial Services Board (FSB) and trades under the number attached to its marketing material.
The compliance officer for Lekgotla is Askari Compliance Services CC. A compliance officer is a good start, but when your main listed number is to a cellphone that might be a concern, especially when it’s offering compliance for 25 different businesses but only has a single listed compliance officer, in the form of Warren Neale.
With the Companies and Intellectual Property Registration Office (Cipro) still having serious question marks about its systems, we didn’t think too much of the fact that neither Lekgotla nor Escalator Capital appear on an online search. However, that would in the normal course of business be a good thing to check before committing any money to a venture.
The next area to consider is the promises being made. Investors will be pitched the idea of a 12,5% dividend tax free, which sounds very attractive – especially if coupled with a 100% capital gain over a five-year period. To put that in context, investors on the JSE know a good dividend yield would be between 4% and 6%. Even property unit trusts are delivering 8% and 10% and those are still subject to tax.
It’s not impossible but it takes some doing. But that means making quality cash generative investments.
Escalator’s website states: “The Equity Fund invests in companies that can provide adequate security on invested capital and that have a proven financial track record.”
Considering its first investment is in JSE-listed journeyman John Daniel Holdings, which is battling to shuffle R1m in debt, questions have to be asked about who picked that investment.
The real flags go up when investors check out the board of directors at Escalator Capital. Executive director Johan Coetzee talks up the various listed businesses he’s been involved in. Those read like a veritable train wreck and include Billcad, Blue Financial Services (BFS) and Beget. Various other directors have ties to BFS along the way in various financial capacities.
Coetzee is also listed as one of the founders of Lekgotla, along with Danie Calitz, with Henry Ansara also listed as a key individual. Similarly, various directors also are involved with Selex – the company that provides “secretarial, corporate advisory and corporate governance responsibilities of Escalator Capital”.
Finweek battles to see how either Calitz or Ansara could be listed as non-executive directors when they’re also involved in the broking of the Escalator Capital product to investors. All three gentlemen also sit on the audit committee, giving little or no independence to the board.
And 28-year-old financial director Michael Drummond is also credited with being appointed at BFS “to implement additional accounting and reporting systems to trace and detect fraud to improve integration between systems and forecast modelling”.
While we’re in no position to pass judgment on a potentially lucrative investment, our eyebrows are definitely raised.
