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DIA/DIB - Dipula Income Fund Limited - Abridged Prospectus - listing of Dipula

Release Date: 28/07/2011 08:21
Code(s): JSE
Wrap Text

DIA/DIB - Dipula Income Fund Limited - Abridged Prospectus - listing of Dipula on the JSE limited DIPULA INCOME FUND LIMITED (formerly Dipula Property Fund (Proprietary) Limited) (Incorporated in the Republic of South Africa on 10 May 2005) (Registration number 2005/013963/06) JSE code for A-linked units: DIA ISIN for A-linked units: ZAE000158317 JSE code for B-linked units: DIB ISIN for B-linked units: ZAE000158325 ("Dipula" or "the company" and together with its subsidiaries, "the group") ABRIDGED PROSPECTUS - LISTING OF DIPULA ON THE JSE LIMITED Abridged prospectus relating to: - A private placement of linked units ("the private placement") in the company by way of: * an offer to subscribe for 77 082 837 A-linked units at an offer price of R8.58 per A-linked unit, which offer will raise up to R661 370 741; * an offer to subscribe for 77 082 837 B-linked units at an offer price of R5.53 per B-linked unit, which offer will raise up to R426 268 089; * an offer to acquire from the sellers (comprising Dijalo Property Services (Proprietary) Limited and Mergence Africa Properties (Proprietary) Limited), 21 260 910 A-linked units at an offer price of R8.58 per A-linked unit, which offer will realise up to R182 418 608; * an offer to acquire from the sellers 21 260 910 B-linked units at an offer price of R5.53 per B-linked unit, which offer will realise up to R117 572 832; and * the subsequent listing ("the listing") of the linked units of the company on the "Real Estate - Real Estate Holdings and Development" sector of the JSE lists. This abridged prospectus is not an invitation to the public to subscribe for and/or purchase linked units in the company, but is issued in compliance with the JSE Listings Requirements and the Companies Act, 2008 (Act 71 of 2008), for the purposes of giving information to the public in relation to Dipula and to invited investors in relation to the private placement. This announcement contains the salient information in respect of Dipula, which is more fully described in the prospectus which was released to invited investors today ("the prospectus"). For a full appreciation of Dipula, the private placement and the listing, the prospectus should be read in its entirety. INTRODUCTION The company has adopted a dual-unit structure consisting of A-linked units and B-linked units (collectively, "linked units"), the salient features of which are outlined in the prospects section below. Subject to Dipula meeting the requirements of the JSE in respect of the requisite spread of linked unitholders, the JSE has granted Dipula a listing in respect of up to 105 532 393 A-linked units and up to 105 532 393 B-linked units in the "Real Estate - Real Estate Holdings and Development" sector of the JSE lists, in terms of the FTSE classification, under the abbreviated names "Dipula A" and "Dipula B", JSE Codes "DIA" for A-linked units and "DIB" for B-linked units and ISIN Codes "ZAE000158317" for A-linked units and "ZAE00158325" for B-linked units with effect from the commencement of business on Wednesday, 17 August 2011. Dipula was incorporated as a private company on 10 May 2005 and, as confirmed by the Companies and Intellectual Property Commission, converted to a public company on 23 June 2011. The financial year end of the group is 31 August. BACKGROUND TO DIPULA Dipula was established in 2006 with the aim of investing in commercial real estate. The company acquired an initial portfolio of R300 million in the same year. Since formation Dipula has been prudently growing its property portfolio. Prior to the listing Dipula merged with Mergence and in the process grew the value of its asset base to R1.4 billion. The acquisition of a portfolio of properties from Redefine Properties Limited ("the Redefine portfolio) and the acquisition of Asakhe Realty Fund (Proprietary) Limited ("Asakhe") which will be implemented immediately prior to the listing will increase the value of the group`s property portfolio to approximately R2.1 billion. The company holds a diversified portfolio of properties throughout South Africa The property management and asset management functions are performed externally by highly competent teams, further details of which will be provided in the prospectus. PROSPECTS Dipula is a well diversified property fund with a retail bias. It aims to achieve dependable, sustainable growth through a focus on quality of income and tight cost management. Rental escalations in the existing portfolio, at approximately 8.4%, are in excess of current inflation. Average rentals are low with scope for positive reversions on renewal. The group is exposed to the high growth segments of the economy. This is particularly so in Dipula`s retail portfolio where the group enjoys significant exposure to the lower income households that are expected to be the primary driver behind the anticipated growth in consumer spending over the next few years. The industrial portfolio is well located in established industrial areas with good access to highways and power supply. Offices are well located, principally in Johannesburg`s Northern suburbs. Prospects for acquisitive growth are considered good. The rapid growth of most existing listed property funds coupled with consolidation in the listed property sector in the past few years has led to existing listed property funds disposing of smaller assets. Dipula is well positioned to prudently exploit these opportunities as well as to exploit opportunities to acquire property currently in private hands. Dipula will leverage off its status as a black managed fund to acquire government and parastatal tenanted properties where opportunities arise. Acquisitions will only be considered if they are yield enhancing and the group will not embark on any speculative development activity. The A and B-linked unit structure provides different risk and reward profiles for different investors. The A-debenture is `bond-like` in nature, with distributions increasing at 5% per annum until 31 August 2017 and then at the lower of 5% per annum or in line with the prevailing CPI rate. The distributions on the A-debentures rank ahead of the distributions on the B- debentures and the group`s distributable income would need to fall by approximately 40% from current levels for the distribution payments on the A- debenture to be at risk. The holders of the B-debentures receive the residual distributable income after the payment of the distributions on the A-debentures. As a result the B- debentures offer greater scope for growth in income distributions. By way of example, if the distributable income of the group was to grow by 8% from the forecast distributable earnings on the B-linked units would grow by almost 11%. PROPERTY INFORMATION The group`s property portfolio valued in aggregate at R2.1 billion at 28 February 2011, by Broll Valuation Services (Proprietary) Limited and Alternative Real Estate Capital Management (Proprietary) Limited, who are independent external property valuers, will consist of 175 properties with an effective GLA of 436 629 m2. Full details of the property portfolio of the group will be provided in the prospectus. SUMMARISED FORECAST INFORMATION The table below sets out a summary of the forecast for the Dipula group, as enlarged by the Redefine portfolio and Asakhe, for the year ending 31 August 2012 Forecast for the year ending 31 August 2012 Distributable earnings R146 378 881 Actual number of A-linked units in issue 105 532 393 Actual number of B-linked units in issue 105 532 393
Distribution per A-linked unit (cents) 79.37 Distribution per B-linked unit (cents) 59.34 138.71
Earnings/Headline earnings per A-linked unit 79.37 (cents) Earnings/Headline earnings per B-linked unit 59.34 (cents) Forward yield based on an issue price of 9.25% R8.58 per A-linked unit Forward yield based on an issue price of 10.73% R5.53 per B-linked unit The figures set out above are extracted from detailed forecast for the year ending 31 August 2012 that has been reported on by the independent reporting accountants, PKF(Jhb) Inc. The detailed forecast, the independent reporting accountants` report on the detailed forecast and the assumptions on which they have been based are set out in the prospectus. MAIN PURPOSES FOR THE PRIVATE PLACEMENT AND THE LISTING The main purposes of the private placement and the listing are to: - provide South African investors, both institutional and private, the opportunity to participate in the income streams and future capital growth through an investment in Dipula; - provide an additional source of capital to fund the growth aspirations of the group; - fund the Asakhe transaction, the Redefine transaction and the Mergence transaction; - repay a portion of loans which are currently outstanding; and - defray the preliminary expenses. SALIENT DATES AND TIMES 2011
Abridged prospectus published on SENS on Thursday, 28 July Opening date of the private placement Thursday, 28 July (09:00) Abridged prospectus published in the press Friday, 29 July on Closing date of the private placement Thursday, 11 August (12:00)(2) Results of the private placement released Friday,12 August on SENS on Results of the private placement released Monday, 15 August in the press on Notification of allotments Monday, 15 August Listing of the linked units on the JSE Wednesday, 17 August (09:00) Accounts at CSDP or broker updated and Wednesday, 17 August debited in respect of dematerialised linked unitholders(3) Notes: These dates and times are South African dates and times and are subject to amendment. Any such amendment will be released on SENS and published in the press. Invited investors may only receive linked units in dematerialised form and must advise their CSDP or broker of their acceptance of the private placement in the manner and cut-off time stipulated by their CSDP or broker. CSDP`s effect payment on a delivery-vs-payment basis. PARTICULARS OF THE PRIVATE PLACEMENT The private placement comprises of: - an offer to subscribe for 77 082 837 A-linked units at a offer price of R8.58 per A-linked unit, which offer will raise up to R661 370 741; - an offer to subscribe for 77 082 837 B-linked units at a offer price of R5.53 per B-linked unit, which offer will raise up to R426 268 089; - an offer to acquire from the sellers 21 260 910 A-linked units at a offer price of R8.58 per A-linked unit, which offer will realise up to R182 418 608; and - an offer to acquire from the sellers 21 260 910 B-linked units at a offer price of R5.53 per B-linked unit, which offer will realise up to R117 572 832, raising in aggregate up to R1 387 630 270. The private placement is being partially underwritten by Redefine Properties Limited for an amount up to R860 million. The directors have made due and careful enquiry to confirm that the underwriter can meet its commitments in terms of the private placement. The directors will not increase the number of linked units offered in terms of the private placement. CONDITIONS TO WHICH THE PRIVATE PLACEMENT AND THE LISTING ARE SUBJECT The listing of the linked units is subject to the following: - the achievement of a public spread of linked unitholders acceptable to the JSE, being a minimum of 300 public A-linked unitholders and a minimum of 300 public B-linked unitholders holding not less than 20% of the A- linked unit issued capital and not less than 20% of the B-linked unit capital of the company, respectively; and - a minimum amount being the R1 387 630 270 being raised pursuant to the private placement however since Redefine Properties Limited has underwritten the private placement in an amount up to R860 000 000, the minimum amount which is required to be raised is R527 630 270 (the difference between the minimum amount required and the underwritten amount). DIRECTORS The full names, ages, nationalities, business addresses, qualifications and functions of the directors of Dipula are set out below. Names and age Zanele Joyce Matlala (48) Business address Sandton Place, 68 Wierda Road East, First Floor Block B, Wierda Valley, 2196 Qualification CA(SA) Function Independent Non-Executive Chairperson Names and age Izak Smolly Petersen (38) Business address Office Suite 300. Killarney Mall Office Towers. Killarney 2093
Qualification B.Com., PGDA, CA(SA) Function Chief Executive Officer Names and age Brigitte de Bruyn (37) Business address Office Suite 300. Killarney Mall Office Towers. Killarney 2093 Qualification B.Com., BAcc, CA(SA) Function Financial Director Names and age Nyangeni Saul Gumede (55) Business address 6th Floor, Block D, Sunnyside Office Park, 2 Carse O`Gowrie Road, Parktown, 2193
Qualification B.Com., CPMRegistered Function Executive Director Names and age Brian Hilton Azizollahoff (50) Business address 54 Melrose Boulevard, 4th Floor, Melrose Arch 2076 Qualification BA (NY), MBA (Wits) Function Independent Non-Executive Director
Names and age Elias (Eltie) Links (65) Business address Carl Cronje Drive, Tygervalley, Bellville, 7535 Qualification B.Com., M.Com. (Economics), M.A. (Economics), PhD (Economics)
Function Independent Non-Executive Director Names and age Younaid Waja (59) Business address 48 Helium Avenue, Extension 5, Lenasia, 1827 Qualification B.Com., Hons B.Compt, CA(SA), HDip Tax Law Function Independent Non-Executive Director All directors are South African nationals. PROSPECTUS The prospectus, which is available only in English, will be issued on Thursday, 28 July 2011. Copies may be obtained during normal business hours between 08h30 and 17h00 from Thursday, 28 July 2011 to Thursday, 11 August 2011 from: - the registered offices of Dipula at 2 Arnold Road, Rosebank, 2196; - Java Capital (Proprietary) Limited at 2 Arnold Road, Rosebank, Johannesburg, 2196, South Africa; - Link Market Services South Africa (Proprietary) Limited, 13th Floor, Rennie House, 19 Ameshoff Street, Braamfontein, Johannesburg, 2001. The document is also available on the following website: www.Dipula.co.za Thursday, 28 July 2011 Corporate advisor, legal advisor, sponsor and bookrunner Java Capital Independent transaction sponsor Deloitte & Touche Sponsor Services (Proprietary) Limited Independent reporting accountants and auditors PKF(Jhb) Inc. Attorneys to the prospectus Ledwaba Mazwai Attorneys Date: 28/07/2011 08:21:37 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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