Wrap Text
Release of Explanatory Memorandum and Independent Expert’s Report and Withdrawal of Statements
INVESTEC AUSTRALIA PROPERTY FUND
Established in Australia and registered with ASIC as a managed investment scheme (ARSN 162 067 736)
Operated by Investec Property Limited (ACN 071 514 246; AFSL 290 909) (“Responsible Entity”)
Registered as a foreign collective investment scheme in terms of the Collective Investment Schemes Control Act
No.45 of 2002
Unit code: IAP
ISIN: AU0000046005
(IAP or the Fund)
Release of Explanatory Memorandum and Independent Expert’s Report (and withdrawal of
cautionary statements to take no action)
Convening of IAPF unitholder meeting
Further to the announcement made by Investec Property Limited (“Responsible Entity”) as responsible
entity for Investec Australia Property Fund (“IAPF”) on Thursday, 15 October 2020, the Responsible
Entity today announced that it will convene a meeting of unitholders in connection with the proposal to:
- internalise the management function of IAPF by creating an internally managed stapled group;
- acquire the management rights of IAPF;
- assume the management rights of an unlisted third party opportunity fund (the TAP Fund) and
certain assets of the Investec Group; and
- invest in the TAP Fund via a commitment of up to $30 million,(1) defined as the TAP Commitment
in the Booklet,
(the “Proposal”).
Notice of Meeting and Explanatory Memorandum
The Notice of Meeting and Explanatory Memorandum for the IAPF unitholder meeting, which includes
an Independent Expert’s Report on the Proposal (“Booklet”), will be released to the Australian
Securities Exchange (“ASX”) concurrently with this announcement and dispatched to unitholders today.
This announcement will also be released to the Johannesburg Stock Exchange (“JSE”) prior to the
market opening in Johannesburg today. The Booklet will available for review by unitholders using the
following link: https://www2.asx.com.au/markets/company/IAP.
The Booklet contains important information about the Proposal. Unitholders should read the Booklet
before deciding how to vote on the Proposal.
Financial information / details of assets being acquired
As previously announced, IAPF will pay a total consideration of $40 million(2) to the Investec Group to
acquire the following assets (referred to as the “Assets” in this announcement):
- the management rights of IAPF (by purchasing the shares in Investec Australia Property
Holdings Pty Limited (“IAPH”), the holding company of the Responsible Entity, the manager of
IAPF and certain other entities that operate the business of IAPF); and
- the management rights of the TAP Fund,
(the “Total Consideration”).
The Total Consideration represents, as at the date of this announcement, the value of the Assets
including the profits attributable to the Assets.(3)The Total Consideration and associated transaction
Footnotes
(1) IAPF II is not expected to contribute a portion of the TAP Commitment until at least the end of March 2021.
(2) Subject to certain adjustments in the Implementation Deed as described in section 11.1 of the Booklet.
(3) The breakdown of the net assets of the Assets is described in the Annexure to this announcement.
costs of approximately $6.7 million will be funded utilising IAPF’s existing debt facility. The progressive
investment in the TAP Fund (TAP Commitment) will be funded by a new debt tranche that will be added
to the existing facility agreement of IAPF. The Total Consideration represents 9.0 times the annualised
forecast FY21 EBIT(4) of the Assets and rights to management fee income that IAPF is acquiring.
The Proposal is expected to be accretive to IAPF’s cash flows through the elimination of investment
management fees, property management fees and leasing fees paid to the Investec Group and the
forecast contribution to earnings from managing the TAP Fund net of additional operating costs
(employee costs, insurance costs, compliance costs and general administration costs). In particular,
the Proposal is expected to be 0.1% accretive to Funds from operations (“FFO”) and 4.8% accretive to
Adjusted funds from operations (“AFFO”) in FY21 on a pro forma basis.(5)
The aggregated pro forma forecast profit after tax attributable to the Assets that are subject of the
transaction on a standalone basis are $1.3 million (which excludes the impact of the $6.7 million of
associated transaction costs) for the twelve month period ending 31 March 2021(6) (refer to the
breakdown in the Annexure to this announcement).
For details about the Assets, see section 3 of the Booklet. In particular, this section describes:
- the new registered managed investment scheme (“IAPF II”) which has been established and
will, together with IAPF, form a new internally managed stapled group which will be listed on
the ASX and the JSE;
- the initial assets of IAPF II, involving a funds management platform initially focused on the TAP
Fund; and
- the TAP Commitment.
For further detailed financial information in relation to the Proposal and the Assets together with details
of the financial consequences of implementing the Proposal, see section 1.1(h) and section 6 of the
Booklet. The basis of preparation of the financial information included in the Booklet (being the Historical
Financial Information, the IAPF Group Pro Forma Historical Consolidated Balance Sheet and the
Forecast Financial Information) is described in the Annexure to this announcement. Unitholders should
also consider the Investigating Accountant’s Report in relation to the IAPF Group Pro Forma Historical
Consolidated Balance Sheet and the Forecast Financial Information prepared by KPMG Transaction
Services for ASX purposes only which is included in the Booklet at Annexure A.(7)
Unitholders who hold their units on the South African sub-register should also consider the ‘Additional
JSE Disclosure’ set out at Annexure B and described in the Annexure to this announcement, together
with the Independent Reporting Accountant’s Reports prepared by KPMG Inc for JSE purposes only,
which are included in the Booklet at Annexure C.(8)
Independent Directors’ recommendation and assessment
The Independent Directors of the Responsible Entity unanimously recommend that unitholders vote in
favour of the Proposal, in the absence of a superior proposal.
The Booklet contains the reasons for the Independent Directors’ recommendation as well as reasons
why unitholders may disagree with the Independent Directors’ recommendation.
The Independent Directors’ recommendation and assessment of the Proposal is provided in section 2
of the Booklet, and the matters considered include the advantages, disadvantages and risks of the
Proposal, together with their assessment of the alternatives considered. The Independent Directors
have concluded that the advantages of the Proposal outweigh the disadvantages and that the
alternatives considered would not provide the benefits or security for unitholders.
Footnotes
(4) EBIT refers to earnings before interest and tax.
(5) See sections 6.2.4.2 and 6.2.5 and Annexure B of the Booklet for details of the basis of preparation, Table 4 in section 6.5.2
of the Booklet for details of the FFO and AFFO calculations and section 6.6 of the Booklet for the underlying assumptions.
(6) For further details, see section 6 and Annexures B and C of the Booklet, which were prepared in accordance with the
Australian Accounting Standards, which are consistent with International Financial Reporting Standards.
(7) Unitholders should note the scope and limitations of the Investigating Accountant’s Report.
(8) Unitholders should note the scope and limitations of the Independent Reporting Accountant’s Reports.
Independent Expert’s conclusion
As previously announced, the Independent Directors appointed Deloitte Corporate Finance Pty Limited
(“Independent Expert”) to prepare an Independent Expert’s Report on the Proposal. The Independent
Expert has concluded that the Proposal is fair and reasonable to, and in the best interests of, unitholders
not associated with the Investec Group.
Details of the Independent Expert’s opinion, and the basis for the Independent Expert’s conclusions,
including its valuation methodology and analysis, are set out in the Independent Expert’s Report, which
is included in the Booklet.
IAPF unitholder meeting
The IAPF unitholder meeting in connection with the Proposal will be held at 5.00pm (AEDST) / 8.00am
(SAT) on Tuesday, 17 November 2020 (held virtually).
The Notice of Meeting, which includes details of the meeting and how to vote, will be sent to unitholders
as part of the Booklet. A proxy form will accompany the Booklet. To be effective, proxy forms must be
received by 5.00pm (AEDST) / 8.00am (SAT) on Sunday, 15 November 2020. As a practical and
administrative matter because this deadline falls on a weekend, unitholders should seek to return their
proxy form by close of business on Friday, 13 November 2020.
Timetable
Sydney time (unless other
specified)
Lodgement date Tuesday, 20 October 2020
Dispatch of the Booklet to Unitholders Tuesday, 20 October 2020
Voting Record Date 7.00pm (Sydney time) / 10.00am
(Johannesburg time) on Friday, 13
November 2020
Proxy Form return time and date 5.00pm (Sydney time) / 8.00am
(Johannesburg time) on Sunday, 15
November 2020(9)
Meeting Date(10) 5.00pm (Sydney time) / 8.00am
(Johannesburg time) on Tuesday,
17 November 2020
If the Resolution is approved by Unitholders and all other Conditions in connection with the
Proposal are fulfilled:
Cross border movement of IAPF I Units between the South African Wednesday, 18 November 2020
Register and the Australian Register ceases at the close of business in
South Africa or Australia (as applicable)
Last day of trading in unstapled IAPF I Units on the JSE Friday, 20 November 2020
Last day of trading in unstapled IAPF I Units on the ASX Monday, 23 November 2020
Stapled Securities commence trading on the JSE (on a normal Tuesday, 24 November 2020
settlement (T+3) basis)(11)
Admission of IAPF II Units to official list of ASX (to trade as part of the Tuesday, 24 November 2020
Stapled Securities)
Stapled Securities commence trading on the ASX (on a deferred Tuesday, 24 November 2020
settlement basis)
Stapling Record Date Wednesday, 25 November 2020
Last day for registration of transfers of unstapled IAPF I Units
IAPF I Units held by Ineligible Foreign Unitholders transferred to the Thursday, 26 November 2020
Sale Nominee
IAPF II Units received by Unitholders(12) Thursday, 26 November 2020
Stapling Date(12) Friday, 27 November 2020
Implementation Date (effective date of management internalisation) Monday, 30 November 2020
Stapled Securities commence trading on the ASX (on a normal Monday, 30 November 2020
settlement basis (T+2)) and continue trading on the JSE (on a normal
settlement basis (T+3))
Dispatch of holding statements of Stapled Securities Monday, 30 November 2020
Cross border movement of Stapled Securities between the South Monday, 30 November 2020
African Register and the Australian Register commences
Timetable endnotes
(9) As a practical and administrative matter because this deadline falls on a weekend, unitholders should seek to return their proxy
form by close of business on Friday, 13 November 2020.
(10) Unitholders are advised that the Meeting Date will occur 6 Business Days prior to the Stapling Record Date, instead of the
conventional 8 Business Days prior to the Stapling Record Date.
(11) Unitholders are advised that the Stapled Securities will be listed 2 Business Days after the last day of trading in unstapled IAPF
I Units on the JSE (“LDT”) and that the settlement of the trades occurring after the LDT will be 2 Business Days after the Stapling
Record Date, instead of the conventional 1 Business Day after the Stapling Record Date. Consequently, any trading of Stapled
Securities on Monday, 23 November 2020 (being two Business Days before the Stapling Record Date), will only settle on Friday,
27 November 2020 (being the Stapling Record Date plus 2 Business Days). Unitholders are accordingly advised to exercise
caution when trading their Stapled Securities on this day. Any trading of Stapled Securities occurring from Tuesday, 24 November
2020 will settle on a normal T+3 basis. IAPF I Units may not be Dematerialised or rematerialised between commencement of
trade on the JSE on Monday, 23 November 2020 and close of trade on Wednesday, 25 November 2020, both dates inclusive.
(12) Unitholders are advised that the issue of IAPF II Units to Unitholders on Thursday, 26 November 2020 merely constitutes the
legal recognition of the IAPF II Units. The IAPF II Units must be legally constituted to enable Stapling to occur on the Stapling
Date. The IAPF II Units issued on Thursday, 26 November 2020 are not quoted for trading at this point. The IAPF II Units will
only be quoted for trading on the JSE and ASX as Stapled Securities. Trading in Stapled Securities will commence on Monday,
30 November 2020 on a normal settlement basis (refer to Implementation Date in timetable above).
The timetable above is indicative only and may change without notice. The Responsible Entity reserves the right
to amend any or all of these dates and times subject to the Listings Requirements, the Corporations Act and other
applicable laws, or to withdraw the Proposal, without prior notice. Any amendment to the Proposal timetable will
be announced to the market through ASX and JSE and posted on IAPF’s website at www.iapf.com.au. The
quotation and commencement of trading of the Stapled Securities is subject to confirmation from ASX and JSE.
Normal settlement of securities traded on the ASX is on a T+2 basis while normal settlement of securities traded
on the JSE is on a T+3 basis.
Categorisation of the Proposal
As previously announced, the Proposal has been categorised as a related party transaction in terms of
the JSE Listings Requirements on the basis that the Responsible Entity is a related party of Investec
Bank plc by virtue of Investec Bank plc being the ultimate holding company of Investec Property
Management Pty Limited, the manager of IAPF.
Withdrawal of cautionary statements to take no action
Unitholders are referred to the cautionary announcement issued by the Responsible Entity in relation
to the Proposal as released on the ASX and the JSE on Thursday, 15 October 2020. As the Responsible
Entity is releasing the Booklet concurrently with this announcement, having received formal approval
from the JSE to dispatch the Booklet, unitholders are advised that such caution is no longer required to
be exercised when dealing in IAPF units. Unitholders are urged to review the Booklet carefully in making
any decision as to how to vote their units at the IAPF unitholder meeting and consult their stockbroker,
accountant or financial or tax adviser if they are uncertain about the impact of the Proposal or their
particular investment objectives.
A copy of the announcement released to the ASX will available for inspection by unitholders using the
following link:
https://www2.asx.com.au/markets/company/IAP
Johannesburg
20 October 2020
Investment Bank and Sponsor
Investec Bank Limited
About Investec Australia Property Fund
Investec Australia Property Fund is an Australian domiciled fund that is dual listed on the JSE and the ASX. The
Fund invests in office, industrial and retail property located in Australia and New Zealand. The Fund is managed
by an experienced team of property specialists on the ground in Australia who have an established track record.
Investec Australia Property Fund is operated by Investec Property Limited. For more about Investec Australia
Property Fund please visit: www.iapf.com.au.
Investec Property Limited ABN 93 071 514 246 AFSL No. 290909 is the Responsible Entity for the Investec
Australia Property Fund ARSN 162 067 736, an Australian managed investment scheme registered in South Africa
as a Foreign Collective Investment Scheme and listed on the JSE Limited and the ASX Limited. Investec Property
Limited is not an authorised deposit-taking institution for the purposes of the Banking Act 1959 (Cth). Investec
Property Limited’s obligations do not represent deposits or other liabilities of Investec Bank plc, including its
Australia Branch. Investec Bank plc (including its Australia Branch) does not guarantee or otherwise provide any
assurance in respect of the obligations of Investec Property Limited.
Not for release or distribution in the United States
This announcement has been prepared for publication in Australia and South Africa and may not be released to
US wire services or distributed in the United States. This announcement does not constitute an offer to sell, or a
solicitation of an offer to buy, securities in the United States or any other jurisdiction. Any securities described in
this announcement have not been, and will not be, registered under the US Securities Act of 1933, as amended
(US Securities Act) and may not be offered or sold in the United States except in transactions exempt from, or
not subject to, the registration of the US Securities Act and applicable US state securities laws.
Not an offer to the South African public
Neither this announcement nor the Proposal comprises of an offer to the public as contemplated by the South
African Companies Act, and no prospectus has been or will be filed with the Companies Intellectual Property
Commission in South Africa in respect of this announcement or the Proposal.
ANNEXURE: SCOPE OF FINANCIAL INFORMATION AND BASIS OF PREPARATION
Overview
This Annexure describes the financial information contained in the Booklet, together with a description
of the basis of preparation of that financial information.
Summary of financial information comprised in the Booklet
The financial information in section 6 of the Booklet comprises:
- summarised historical consolidated statements of profit and loss and other comprehensive
income of IAPF I for the financial years ended 31 March 2018 (“FY18”), 31 March 2019 (“FY19”)
and 31 March 2020 (“FY20”) as set out in section 6.3 of the Booklet (“Historical Income
Statements”); and
- summarised historical consolidated statement of financial position of IAPF I as at 31 March
2020 as set out in column A of Table 2 in section 6.4 of the Booklet (“Historical Consolidated
Balance Sheet”);
(collectively, the “Historical Financial Information”);
- pro forma historical consolidated statement of financial position of the IAPF Group assuming
the Ann Street disposal and the implementation of the Proposal as at 31 March 2020 as set
out in column D of Table 2 in section 6.4 of the Booklet;
(the “IAPF Group Pro Forma Historical Consolidated Balance Sheet”);
- aggregated forecast statement of profit and loss and other comprehensive income of IAPF I for
the year ending 31 March 2021 (“FY21”) (“IAPF I Forecast Income Statement”) as set out in
column A of Table 3 in section 6.5 of the Booklet;
- forecast statement of profit and loss and other comprehensive income of IAPF II for the period
from the Implementation Date to 31 March 2021 (“IAPF II Forecast Income Statement”) as
set out in column B of Table 3 in section 6.5 of the Booklet; and
- aggregated forecast statement of profit and loss and other comprehensive income of the IAPF
Group for the year ending 31 March 2021 (“IAPF Group Forecast Income Statement”) as set
out in column D of Table 3 in section 6.5 of the Booklet;
(together the “Forecast Income Statements”); and
- pro forma forecast consolidated statement of profit and loss and other comprehensive income
of the IAPF Group assuming implementation of the Proposal on 1 April 2020 (“IAPF Group
Pro Forma Forecast Income Statement”) as set out in column F of Table 3 in section 6.5 of
the Booklet,
(collectively, the Forecast Income Statements and the IAPF Group Pro Forma Forecast Income
Statement, “Forecast Financial Information”).
In addition, the financial information in Annexure B of the Booklet comprises:
- a breakdown of the aggregated forecast statement of profit or loss and other comprehensive
income of IAPF I for FY21 as set out in column A of table 3 in section 6.5 of the Booklet,
comprising:
- statement of profit or loss and other comprehensive income of IAPF I for the four
months ended 31 July 2020 (“Reviewed IAPF I Income Statement”) as set out in
column A of Table 1 of section 1.3 of Annexure B of the Booklet;
- forecast statement of profit or loss and other comprehensive income of IAPF I for the
eight months ended 31 March 2021 (“IAPF I Eight-Month Forecast Income
Statement”) as set out in column B of Table 1 of section 1.3 of Annexure B of the
Booklet;
- aggregated forecast statement of profit or loss and other comprehensive income of
IAPF I for the year ending 31 March 2021 (“IAPF I Forecast Income Statement”) as
set out column C of Table 1 in section 1.3 of Annexure B of the Booklet;
- a breakdown of the IAPF Group Pro Forma Forecast Income Statement as set out in column F
of Table 3 in section 6.5 of the Booklet, comprising:
- IAPF Group Forecast Income Statement as set out in column A in Table 2 of section
1.4 of Annexure B of the Booklet;
- pro forma adjustments to incorporate the statement of profit or loss and other
comprehensive income of IAPF II for the four months ending 31 July 2020 (“IAPF II
Pro Forma Income Statement”) as set out in column B of Table 2 of section 1.4 of
Annexure B of the Booklet;
- forecast statement of profit or loss and other comprehensive income of IAPF II for the
3 months ending 31 October 2020 as set out in column C of Table 2 of section 1.4 of
Annexure B of the Booklet;
- pro forma consolidation and elimination journal entries as set out in column D of Table
2 of section 1.4 of Annexure B of the Booklet; and
- IAPF Group Pro Forma Forecast Income Statement as set out in column E in Table 2
of section 1.4 of Annexure B of the Booklet.
The aggregated pro forma forecast profit after tax attributable to the Assets that are subject of the
transaction on a standalone basis is comprised of the:
- IAPF II Forecast Income Statement as set out in column B of Table 3 in section 6.5 of the
Booklet;
- IAPF II Pro Forma Income Statement as set out in column B of Table 2 of section 1.4 of
Annexure B of the Booklet; and
- forecast statement of profit or loss and other comprehensive income of IAPF II for the 3 months
ending 31 October 2020 as set out in column C of Table 2 of section 1.4 of Annexure B of the
Booklet.
A breakdown of the net assets related to the Assets is set out in column D (IAPF II pro forma) of Table
6 in section 6.9 of the Booklet.
Basis of Preparation of financial information contained in the Booklet
The IAPF Group Pro Forma Historical Consolidated Balance Sheet included in the Booklet has been
prepared and presented in accordance with the recognition and measurement principles prescribed in
the Australian Accounting Standards, and which is consistent with the International Financial Reporting
Standards.
The Forecast Financial Information prepared by the Responsible Entity included in the Booklet is
unaudited and is based on the best estimate assumptions of the directors of the Responsible Entity.
The basis of preparation and presentation of the Forecast Financial Information is, to the extent
applicable, consistent with the basis of preparation and presentation of the IAPF Group Pro Forma
Historical Consolidated Balance Sheet. The Forecast Financial Information and the IAPF Group Pro
Forma Historical Consolidated Balance Sheet contained in the Booklet should be read in conjunction
with, and are qualified by reference to, the information contained in section 6 of the Booklet.
This should be read in conjunction with the detailed basis of preparation and presentation of financial
information as set out in section 6.2 of the Booklet and section 1.2 of Annexure B of the Booklet.
Capitalised terms not defined in this announcement are defined in the Glossary in section 13 of the
Booklet.
Date: 20-10-2020 07:49:00
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