V&A Waterfront gets new owner

Posted On Wednesday, 27 September 2006 02:00 Published by
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The largest property deal in South African history - the sale of the V&A Waterfront - is concluded under wraps. With Transnet acting chief executive Vuyo Kahla.

The largest property deal in South African history - the sale of the V&A Waterfront - is concluded under wraps. With Transnet acting chief executive Vuyo Kahla

LINDSAY WILLIAMS: Vuyo, can you tell us about the buyer - what’s happened?

VUYO KAHLA: The buyer is the London & Regional (L&R) Consortium. They’ve acquired the V&A Waterfront through a company known as Lexshell 44 General Trading (Lexshell) a company incorporated in South Africa. That of course includes L&R, a well known private property group in the United Kingdom with European operations in Stockholm, Frankfurt and Helsinki, and also in Moscow. They teamed up with Istithmar, a Dubai company that’s ultimately owned by the Dubai government through Dubai World. They in turn teamed up with South African BEE investors - the list of BEE investors includes Decorum Investment Holdings, a company trading as Western Cape Women’s Investment Alliance, Kgontsi Investments, Tsa Rona Investments, the Cape Empowerment Trust, and a wide number of other individual entrepreneurs including Luyanda Mpahlwa, Hassen Adams and Vincent Maphai. The 25% BEE component sets aside 2% for an employee share ownership plan (Esop) for black employees of the V&A Waterfront.

LINDSAY WILLIAMS: What was the selling price?

VUYO KAHLA: The V&A Waterfront has been sold for R7.04-billion.

LINDSAY WILLIAMS: That’s not bad. Was that the predominant factor in selling to the L&R Consortium, or were other factors taken into account?

VUYO KAHLA: It was the predominant factor. The criteria included 85 points for price, 10 points went into BEE, and there were five points related to employee retention. They met those criteria. Theirs was the best price offer we received, and the employees of the V&A Waterfront have a job guarantee in this transaction of at least two years.

LINDSAY WILLIAMS: Was there a reserve price on the V&A? Was R7-billion around your target?

VUYO KAHLA: We never set a reserve price. Our approach was that we would maximise value, see what came up in the bids - and ultimately we would take the best offer.

LINDSAY WILLIAMS: There were eight other participants in the process - any South African bidders?

VUYO KAHLA: There were a number of participants. The winning bidder included South Africans. There were South African bidders in the total bid process.

LINDSAY WILLIAMS: Was there any influence from any other authorities? That the fact that it’s predominantly an overseas bidder that won - the foreign exchange aspect of this deal must have been quite a nice sweetener for the SA Reserve Bank?

VUYO KAHLA: No, there was no pressure on us from any other players. We were driven at all times by the criteria we had set - which was to maximise value, to ensure BEE participation, and the retention of employees. That’s what drove the transaction. Naturally we are happy that it’s communicated to us - and I believe to South Africa - that there’s continued confidence from foreign investors in South Africa.

LINDSAY WILLIAMS: The Dubai part of the consortium must have also been quite an exciting part for you - I understand they’re responsible for The Palm development. Globally that’s considered quite spectacular - I suppose you must look at that thinking if they can do that then they can do similar exciting projects at the V&A?

VUYO KAHLA: We are definitely excited about what they intend to do at the V&A - they’ve boldly put it to us that the best is yet to come in relation to development at the V&A Waterfront. They’re happy with the V&A Waterfront developments as they are - I think it’s really a case of them bringing in other international concepts as they develop the Waterfront further, taking into account that about 4% of the Waterfront still remains open for development.

LINDSAY WILLIAMS: Have they given you any sneak previews of what their plans for the future might be?

VUYO KAHLA: Not really. They’ve indicated of course that they would want this to be a prestigious African Riviera - that’s what they’re looking at.

LINDSAY WILLIAMS: Once the regulatory authorities and SA Reserve Bank approval is granted what are you going to do with the R7-billion?

VUYO KAHLA: Bearing in mind that 74% of the shareholding of the V&A Waterfront is owned by the Transnet retirement and pension funds they are going to be looking to see where best to invest the money. They have the opportunity to diversify their portfolio - I believe a lot of effort is going to go into looking for the opportunities they should be investing in. As far as Transnet is concerned - clearly this assists us in restructuring the balance sheet, and with a stronger balance sheet we are able to meet our commitments in the R64.5-billion infrastructure investment that we’re undertaking over the next five years.

Publisher: Business Day
Source: Business Day

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