Western Cape-based black economic empowerment private equity fund Cape Empowerment Trust (CET) and African Alliance Properties on Monday announced that they had sold their property portfolio, amounting to R690m payable in units at R370, to listed property loan stock company Ambit.

Shaun Rai, CE of CET, said that because of the favourable rate at which units were sold, his company had decided to refinance the debt on the portfolio in order to take advantage of the growth in the Ambit share price, which is trading at R4,50.

"The net gain to the trust is some R70m on that basis," Rai said.

"Ambit will be fully empowered as a result of the transaction and will therefore exceed the property charter requirements of 10% ownership."

Banking group Absa is the majority shareholder of Ambit and Rai said his company was "proud" to have been chosen by the bank to be its empowerment partner in Ambit.

"Calculations reveal that the deal is 1,5% diluted in income to Ambit shareholders and that it is 2,5% accretive to the net asset value of Ambit.

"This is unusual because the deal does not dilute shareholder value as significantly as other black economic empowerment transactions," he said.

The accomplished deal sees the property arm of CET getting a 23,8% stake in Ambit's current format.

Rai said that after the transaction Ambit would have a debt-equity ratio of less than 24%.

Rai said CET was in negotiations with Absa with the intention of obtaining a shareholding of 22% of Ambit Management Services (AMS).

An additional 4% of AMS would be purchased for a cash consideration which would result in a 26% shareholding for CET.

Absa has agreed in principle to fund the debt portion of the merger.