SA Corporate circles battling Indluplace

With its share price down 73% on the JSE in the past five years, Indluplace, a real estate investment trust (Reit), is set to become the latest company to delist from the bourse, with a R1bn merger with SA Corporate on the cards.

SA Corporate has proposed acquiring the entire issued ordinary share of Indluplace, saying the deal provides Indluplace shareholders with a liquidity event by way of a cash offer for their shares,.

It said the mooted deal will also enable it to grow its portfolio in the residential sector and further its strategy of creating a larger, more diversified residential property portfolio.

“To date, the Indluplace residential property portfolio has not been successful in reaching the critical mass that the listing in 2015 sought to achieve. The proposed transaction, if implemented, will enhance SA Corporate’s exposure to the residential sector. SA Corporate views the Indluplace portfolio as complementary to its own quality residential rental portfolio held within Afhco Holdings,” the company said.

“SA Corporate has successfully executed a programme of divestment of noncore assets realising full value during a period of global economic stimulus and is now in a position to deploy certain of these proceeds in an accretive acquisition aligned to its residential property strategy.”

If concluded, the deal will create a group with a portfolio worth nearly R20bn. 

SA Corporate owns a diversified portfolio of assets in SA valued at R15bn, a 50% stake in three Zambian entities with properties valued at R1.1bn.

Indluplace has a portfolio of 124 buildings, valued at R3.3bn, with most of the properties situated mainly in Gauteng, with further limited exposure in Mpumalanga and the Free State.

Reduce debt

Indluplace majority shareholder Fairvest has endorsed the proposed merger and said it expects to get R651m from the sale of its 56% stake in the company. 

Fairvest said it will use the proceeds from the sale to reduce debt.

“Fairvest’s investment in Indluplace is not strategic, and implementation of the proposed disposal would be a step towards refocusing the Fairvest portfolio towards lower LSM and convenience retail. Fairvest does not expect the proposed disposal to have any impact on Fairvest’s distribution per share,” the company said.

The JSE had a torrid 2022 with a number of delistings driven by corporate actions and lower liquidity in the small-capitalisation market. A total 22 companies delisted from the exchange last year, taking the number of listings down to 302, from 466 20 years ago.