Nick Wilson

Property Correspondent

COROVEST International, the British property arm of SA-based Coronation Investments and Trading, listed its property fund, CIREF, on London’s Alternative Investment Market (AIM) on Friday.

CIREF, which has a strong South African shareholding with more than 60% of the fund held by local investors, including JSE-listed property loan-stock company Redefine Income Fund, performed strongly on listing. Its share price increased to £1,50 during the day from an opening price of £1,45.

The fund’s market capitalisation at issue price was £49,7m and the market cap during the day moved to £53,1m.

Speaking from London, Corovest International chairman Gavin Tipper said the fund was “relatively small in the bigger picture of the London Stock Exchange”, but Corovest had built it up from nothing in 2002.

Corovest planned to grow the property fund.

Tipper, a South African, is based in SA while Corovest International CEO Mike Watters, also South African, is based in London.

Watters said CIREF offered South African investors an exchange control-compliant offshore investment opportunity on the world’s “fastest growing junior market”.

The fund would consider a JSE dual listing in the medium term, subject to exchange-control approval.

Brian Azizollahoff, CEO of Redefine Income Fund, said Redefine had acquired 18% of CIREF for R110m, making Redefine the only listed property company with an offshore investment.

Azizollahoff said Redefine had “looked at diversification for some time”, but that it had not been opportune to go offshore in the past because the yields were low in the UK compared with SA.

But he said South African-listed property yields had dropped and this made it more affordable to pursue offshore investments.

Said Azizollahoff: “We’ve battled to find investments in SA at yields that offer us the right level of value. CIREF was a good base to look offshore.

“When CIREF was offered to us, we immediately took note because we were familiar with management and the promoter, Corovest.”

He had visited the UK in February this year before Redefine’s decision to invest. “I met with management and did a tour of a large number of the properties that have formed the portfolio and I was very impressed both with the quality of assets as well as management’s knowledge of the UK and European property market.”

He said Watters had a proven track record as a developer. “They’re going to be involved not only in acquiring existing buildings but also in redevelopment.”

CIREF’s targeted annual payout to shareholders was 4,5% of net asset value.

When CIREF said last month that it was listing, it said it had elected to list on AIM despite having qualified to list on the main London Stock Exchange (LSE). AIM offered all the benefits of the LSE main market, including access to capital within a less onerous and expensive regime.

Watters said the capital the fund had raised before listing would be used primarily for growth in CIREF’s retail portfolio. The fund’s retail development in Newport’s town centre in the UK had been approved by the local council to grow to 51000m².

Newport, one of three retail developments, would have leisure facilities