PIC now biggest shareholder in ailing Texton Property Fund
SA's largest asset manager now owns nearly a fifth of an embattled real estate company after its stake grew jumped from 5.2% to 18.9%
The country’s biggest asset manager, the Public Investment Corporation (PIC), has become the largest shareholder in embattled Texton Property Fund, as it looks to turn around the struggling company.
Texton announced that the PIC had grown its stake from 5.2% to 18.9%, which Texton’s CEO, Marius Muller, said was a vote of confidence in the company’s new management.
The increased holding follows the transfer of shares formerly held by empowerment group Texton Broad-Based Empowerment to the PIC, after it defaulted on its loan with the asset manager.
“Hopefully this brings an end to market speculation regarding the PIC’s position as it relates to Texton. I see this as a vote of confidence for them in the future of the company and their willingness to work together to create value,” Muller said.
He said his team was trying to restore shareholder confidence in Texton which had been eroded since the company was formed out of Vunani Property Investment Fund (VIPF) in 2013. There have been five CEOs at Texton during this period.
VIPF was listed in 2011. A consortium bought its external management contract in November 2013 and the fund was renamed Texton Property Fund in 2014.
Muller was appointed CEO in December, having been in an interim position since September when former CEO Nosiphiwo Balfour resigned.
Texton’s share price has plummeted from a high of R12.15 in 2014 to R4.25 at the end of trade on Wednesday. The company has been unable to provide dividend growth forecasts for the year to June.
Texton’s asset base is worth R5.2bn, with 61.8% of the portfolio by value located in SA and the remainder in the UK. Its market capitalisation is R1.6bn and its SA portfolio includes offices, industrial assets and retail properties. Its UK portfolio includes a stake in Broad Street Mall in Reading. Muller said the company was trying to sell properties worth R100m, which was a part of its turnaround plan and that it was not in a position to pursue acquisitions.
“Our current focus is not about growing the fund. The focus is about reducing the discount to net asset value and restoring shareholder confidence,” said Muller.
In 2018 some of Texton’s shareholders told the company’s board that it needed to be delisted to prevent further value destruction. But Muller said while it was beyond his control to stop directors and shareholders from trying to take the stock off the JSE, he and his management team would continue to get the struggling company’s affairs in order.
Few property companies have been delisted from the JSE over the past decade.
But head of listed property funds at Stanlib, Keillen Ndlovu, said there was “room for some of the listed property stocks trading at huge discounts to net asset value to be either taken out, or to delist, if they can find private buyers, or simply sell the property assets and return the cash to unit holders”.
The PIC invests more than R2-trillion on behalf of the Government Employees Pension Fund and other government social funds. Several of its investments as well as the conduct of its directors and executives are under scrutiny at a judicial commission of inquiry.