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Nick Wilson

Property Correspondent

A BLACK-owned and controlled empowerment consortium, which includes South African National Civic Organisation (Sanco) president Mlungisi Hlongwane and Bridgette Radebe, wife of Transport Minister Jeff Radebe, has bought a 25% stake in listed property loan stock company Vukile Property Fund.

The R439m deal, facilitated by the sale of 67,4-million Vukile linked units by Vukile majority unitholder, life assurer Sanlam, has resulted in Vukile immediately achieving the draft property sector empowerment charter’s target of 25% black ownership within five years.

Announcing the deal yesterday, Sanlam group CEO Johan van Zyl said that the property deal was a "further step" in Sanlam’s empowerment strategy, which dated back to the empowerment of Metropolitan Life in the 1990s.

Banus van der Walt, MD of Sanlam Properties, which facilitated the deal, said the transaction reduced Sanlam Life’s unit holding in Vukile to 33%.

Van der Walt said Sanlam had agreed to sell its linked units in September for 640c a unit, which represented a 2,5% discount to the then 30-day volume weighted average price of units.

He said the deal also included a minimum three-year lock-in period for the empowerment partners. "This is not a short-term deal. The whole spirit of the deal was to find long-term investors that can bring value to Vukile," said Van der Walt.

The empowerment consortium called Vukile BEEShareCo also has players who are active in the property market.

Vukile CEO Gerhard van Zyl said the company was "very happy" with the quality of the individuals represented in the consortium and "the fact that they bring a wealth of property experience to Vukile".

The proposed shareholders of Vukile BEEShareCo are the Buhlobo Consortium with an agreed 40%, a broad based participation trust with 24%, and a still-to-be-announced empowerment partner with 12%.

Sanlam will retain 24% of Vukile BEEShareCo.

Hlongwane is chairman of the Buhlobo Consortium. Radebe is executive chairman of Mashudu Properties, which owns 32,5% of Buhlobo.

Other shareholders in the Buhlobo structure include Sakhisizwe Holdings, Akhona Properties, Batsalani Properties and Panavest Properties.

The deal was also received well by the market. First South Securities property analyst Leon Allison, said he thought the deal was a "good way for Sanlam to reduce its stake in Vukile without it being dilutive to existing unit holders".

"We should see more of these kinds of deals being concluded in the listed sector," said Allison.

Andisa Securities property analyst Len van Niekerk said the deal was positive because it gave Vukile its 25% empowerment requirement.

Van Niekerk said the empowerment consortium also had property expertise which could add some value to Vukile. He said the deal was also not dilutionary for current shareholders.

"Overall it is positive for shareholders and it is positive for Vukile," said Van Niekerk.

Sanlam has provided financial support in the form of a guarantee for R140m, and Nedbank Corporate is funding the transaction via a R439m loan.