From left to right: Johan Holtzhausen is CEO of PSG Capital, Nico de Waal is CEO of PSG Alpha Investments, Jannie Mouton is Chairman of PSG Group, James Wilson is CEO of Amdec Group, Arthur Case is CEO of Evergreen Retirement Holdings and Piet Mouton is CEO of PSG Group. Picture: SUPPLIED
From left to right: Johan Holtzhausen is CEO of PSG Capital, Nico de Waal is CEO of PSG Alpha Investments, Jannie Mouton is Chairman of PSG Group, James Wilson is CEO of Amdec Group, Arthur Case is CEO of Evergreen Retirement Holdings and Piet Mouton is CEO of PSG Group. Picture: SUPPLIED

PSG Group, the investment company that has enjoyed enormous success in backing Capitec Bank and private education specialist Curro Holdings, has unveiled its "next big thing" with a R675m punt on the retirement living sector.

On Tuesday PSG, via investment subsidiary PSG Alpha, said it would secure a 50% stake in retirement village developer Evergreen Lifestyle — a division of the real-estate group Amdec — via an issue of new shares.

Amdec’s best-known assets include the popular Melrose Arch mixed-use precinct in Johannesburg, The Yacht Club in Cape Town, Westbrook in Port Elizabeth and Val de  Vie and Pearl Valley in the  Cape Winelands.

While most market watchers initially registered surprise at PSG moving into a real estate investment, PSG Alpha CEO Nico de Waal said Evergreen represented a play on the services sector with an important property underpin.

"We see Evergreen much in the same light as we viewed Curro … it operates in a sector with high barriers to entry and the company is rapidly building a competitive advantage in its brand." De Waal said Evergreen would achieve rapid expansion of its footprint.

An information sheet released by Evergreen showed five retirement villages in operation in the Cape Town suburbs of Muizenberg (218 units), Bergvliet (65 units), Deep River (57 units) and Lake Michelle (31 units), as well as Broadacres (130 units) in Johannesburg. There were also new locations secured at Noordhoek (Cape Town), Val die Vie (Cape Winelands), Hilton (KwaZulu-Natal) and Westbrook (Port Elizabeth).

The total value of assets for Evergreen was estimated at R1.8bn. Evergreen has set a three-year target of nine operating villages with an asset value of about R7bn. The five-year target pencils in more than 20 villages with a gross asset value of more than R20bn.

De Waal said Evergreen would require more development capital in ensuing years, and it could be listed on the JSE in the medium term. "A JSE listing is not something that the two parties required, but we have talked about it with a three-to five-year view. This is a sizeable investment, and there’s no doubt it will require more capital  going forward." This investment was "the next big thing" PSG had been promising shareholders in recent years.

"If you take the R675m we are putting into Evergreens and add in the R300m to R350m that PSG Alpha is likely to invest in [soon-to-be-listed tertiary education venture] Stadio Holdings, then you are looking at investments that will roughly be worth R1bn." He said PSG Alpha was excited about the Evergreen investment because the local retirement-lifestyle sector was fragmented and underserviced.

"Mostly you have old-age homes … that nobody really wants to end up in. We think Evergreen can create clear competitive advantages and a trusted retirement brand."

Vunani Securities analyst Anthony Clark said PSG Alpha’s deal represented the first foray by a major JSE-listed investment company into the retirement lifestyle sector.

The cradle-to-grave concept was becoming a key part of sustainable development for companies. "PSG Alpha’s move into Evergreen cements the fact that retirement is becoming a large growth opportunity, not only in selling property but selling services to crate annuity income flows," Clark said.

hasenfussm@fm.co.za

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