COMPANY COMMENT: SA’s curious case of external management
A number of medium to large listed property companies still have external management companies
A number of medium to large listed property companies still have external management companies, to the chagrin of some shareholders. They say it creates a conflict of interest if the CEO of the fund and the head of the external management company are the same person. Shareholders also complain about what they call exorbitant fees paid to external managers. According to them, this fee should be reinvested in the fund or paid as dividends. CEOs counter these assertions, saying they have invested personally by buying shares in the funds, which means it would not be in their interest to pay exorbitant fees. An example is Dipula Income Fund where Izak Petersen is CEO and also the executive director of Mergence Africa Holdings. Mergence Africa Properties, which falls under Mergence Africa Holdings, manages Dipula’s properties. But Dipula’s management is deeply invested in the fund, which means potential conflicts do not apply to them, says Petersen. The idea of external management compani...
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