Thursday, 14 April 2011 - 20:00
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Yesterday Ian wrote about global commodity company Glencore looking to list. As he mentioned, businessmen (and their investment bankers) are no fools when it comes to understanding the true long term value of their business versus the price that the investment community would place on their company.
Today saw the listing of the Investec Property Fund on the JSE. This is a portfolio of some 29 properties with an initial NAV of R1.7bn and includes industrial, retail, and office properties primarily situated in Gauteng. Some well known buildings outside of Gauteng include the Investec Offices in Umhlanga Rocks, just north of Durban, and Woolworths’ head office in Longmarket Street, Cape Town.
The share price in the private placement ranged from R9.50 – R10.60 a share and it listed at R10.80, now trading at R10.44. Clearly there is appetite for more property listings with Old Mutual also indicating that they are looking to list a R12bn property fund later in the year. With property being such a stellar performer over the past decade or so in South Africa it does make sense to list some of these assets now. Below is a chart of the performance of listed property vs listed equity since the beginning of 2000.
Many investors enjoy the thrill of participating in an IPO (Initial Public Offering) as it provides for a good story around the braai. What these investors often forget to do is calculate a fair value for the IPO and compare it to the price that it is coming to the market at. Ultimately any investment is buying a share in a company, so it therefore makes sense that you have an idea of how much the company is worth to ensure that you don’t over pay for the asset.
I haven’t had a look specifically at the Investec offering, but potential investors would need to ask themselves a few questions (not an exhaustive list) including:
• What’s the initial yield on my investment? – compare to yields of other property investments
• What’s the quality of their property portfolio? – compare to quality of other property investments
• What’s the outlook for property in South Africa? – compare to outlook of other assets
• Why did Investec choose to list this portfolio now?
• Is there anything I’m missing out here?
At Seed, we know that investors should be extra cautious with new listings. There will no doubt be times when new listings come on at attractive prices and have attractive growth prospects, but most of the time we prefer companies and management teams with good long track records that are, for some reason or another, currently unloved by the market.
What’s your take on the property market (both listed and direct) in South Africa? Share your views on our Facebook Fan page by clicking here and commenting under this post.
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Thu, 14 Apr 2011
South African retailer Clicks Group Ltd posted a 22 percent rise in first-half earnings on Thursday, driven by a strong performance in its core drug chain store and said it saw strong full-year growth.. . .
Resgen released their quarterly report for the three months ended 31 March 2011. Resgen is developing its planned Boikarabelo coal mine in the Waterberg region of South Africa, which has one of the country's largest remaining coal deposits. Highlights for the. . .
Business Day reported that Nigeria's Sterling Bank has confirmed that that FirstRand is considering investing in it. FirstRand wants to grow in Africa and has targeted Nigeria as a growth market. The bank is believed to be willing to spend up. . .
World Markets (Spot Prices)
|JSE Top 40||17:00||29207.48||66.95||0.23%|
|JSE Indust 25||17:00||26812.36||79.32||0.30%|
|Rand / Dollar||19:58||6.8523||0.0532||0.78%|
|Rand / Pound||19:55||11.1732||0.1394||1.26%|
|Rand / Euro||19:55||9.9253||0.1010||1.03%|
|Rand / NZD||19:58||5.4323||0.0715||1.33%|
|Rand / AUD||19:55||7.2205||0.0750||1.05%|
|Yen / Dollar||19:59||83.2800||-0.6200||-0.74%|
|Euro / Dollar||19:55||0.6901||-0.0021||-0.30%|
|Dollar / Euro||19:59||1.4484||0.0045||0.31%|
|Pound / Dollar||19:55||0.6114||-0.0031||-0.50%|
Click here for the Sharenet Spot Price page
The JSE Today
|Index Name||RP||Move||% Move|
|Financial & Ind. 30||30,172.57||18.79||0.06%|
|Oil & Gas ||28,761.90||-195.85||-0.68%|
|Oil & Gas Producers ||15,464.74||-105.31||-0.68%|
|Basic Materials ||32,113.64||163.70||0.51%|
|Forestry & Paper ||14,079.03||-30.66||-0.22%|
|Industrial Metals ||30,561.27||-159.37||-0.52%|
|General Industrials ||76,423.42||883.63||1.17%|
|Consumer Goods ||26,652.55||224.23||0.85%|
|Automobiles & Parts ||3,090.99||33.97||1.11%|
|Health Care ||31,633.66||5.47||0.02%|
|Food Producers ||47,514.43||61.11||0.13%|
|Index Name||RP||Move||% Move|
|Personal Goods ||393.31||5.49||1.42%|
|Consumer Services ||52,267.93||129.52||0.25%|
|General Retailers ||41,052.35||143.08||0.35%|
|Travel & Leisure ||3,658.36||35.65||0.98%|
|Support Services ||2,455.04||20.79||0.85%|
|Non-life Insurance ||30,204.67||581.98||1.96%|
|Life Insurance ||16,338.92||41.31||0.25%|
|General Financial ||2,254.90||-11.64||-0.51%|
|SHARIAH TOP40 ||3,314.30||7||0.21%|
|FTSE/JSE SHARIAH ALL||3,365.79||7||0.21%|
|FTSE JSE Fledgling ||4,529.57||-0||-0.01%|
|FTSE/JSE Alt X ||990.99||-22||-2.19%|
|SA LISTED PROPERTY ||370.34||-0.45%|
|CAPPED PROPERTY ||309.00||-0.23%|
|FTSE/JSE RAFI 40||6,781.83||12||0.18%|
|Capped Top 40||15,160.62||27||0.18%|
|Capped All Share||16,282.13||28||0.18%|
Click here for the Sharenet Index Summary page
Latest Consensus Changes**
|REI||REINET INVESTMENTS SCA||HOLD||11 Apr|
|REM||REMGRO LIMITED||BUY||11 Apr|
|HAR||HARMONY GOLD MINING COMPA...||BUY||08 Apr|
|ADH||ADVTECH LIMITED||BUY||07 Apr|
|AEG||AVENG LIMITED||BUY||06 Apr||
|Expected||Company Name||Fin. Date|
|18 Apr 2011||B-W||February 2011 (Interim)|
|18 Apr 2011||B-WP||February 2011 (Interim)|
|18 Apr 2011||INGENUITY||February 2011 (Interim)|
|18 Apr 2011||TREMATON||February 2011 (Interim)|
|19 Apr 2011||AUSTRO||February 2011 (Interim)|
|NAIL -N-||11-04-05||11-04-19||11-05-03||R 0.1760|
|GROUP 5||11-02-14||11-04-08||11-04-18||R 0.5200|
|MRF||Merafe Resources Ltd||14/04/2011||Confirmed|
|CIL||Consolidated Infrastructure Group Ltd||15/04/2011||Confirmed|
|IDE||Ideco Group Ltd||19/04/2011||Confirmed|
|ZSA||Zurich Insurance Company South Africa Lt...||20/04/2011||Confirmed||
Stock Exchange News Service
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