Owen Nkomo tries again at student housing
The entrepreneur aims to create a property fund with at least R250m in the first tranche from communities and private investors
Entrepreneur Owen Nkomo is taking another crack at creating a student property fund after failing to list one in 2018, blaming the collapse of the Resilient stable for an inability to raise money at the time.
This time, instead of buying student accommodation assets, Nkomo will develop his own after raising tranches from private investors as well as communities.
The public will be able to buy an interest in the new Ithubalethu fund from as little as R5,000. Nkomo aims to raise at least R250m in the first tranche, which will be concluded in the middle of April. He said community groups in townships as well as private investors had already expressed an interest in buying stakes.
Nkomo had been planning to create both an unlisted and a listed property fund. The listed fund was on hold while institutional investors were anxious.
“At the end of 2017 we were well on track to list Inkunzi Student Accommodation Fund with a R1.4bn portfolio. But then the property sector fell into a state of turmoil at the beginning of 2018 when the investors started selling Resilient company shares. It became impossible to raise the money we needed to buy the portfolio and we had to put everything on hold,” he said.
A number of reports were released in January 2018 about Resilient and other companies in its stable — Fortress, Nepi Rockcastle and Greenbay. There were accusations of insider trading and market manipulation. There was a large sell-off of the four companies’ shares and contagion affected other property stocks, Nkomo said, with many equity investors selling their shares.
The Financial Sector Conduct Authority has a two-part ongoing investigation: possible insider trading and price manipulation in the Resilient groups’ shares; and false and misleading reporting by and on the Resilient stable.
Nkomo said once he had raised R250m “he would be able to start on one or two projects”.
He would then raise more money in another tranche and gradually develop a student housing portfolio over the next five years, which could include assets elsewhere in Africa.
“There is a tremendous shortage of student housing in SA and Africa. A major problem is that people who live in townships like Alexandra cannot study successfully at home because of noise and a lack of facilities. It also takes ages for them to transport themselves to university. So I want to be able to serve masses of people like this with well-located accommodation at about R3,000 a bed,” he said.
Students would be able to get scholarships and funding to stay at Ithubalethu residences, said Nkomo, adding that he would also create career guidance facilities.
Nkomo manages high net worth individuals’ money through Inkunzi Wealth Group, having worked as a banker and trader at Deutsche Bank before starting his wealth management business.