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Abridged prospectus-Opening of offer to invited investors to subscribe for shares and listing of Pivotal on the JSE
The Pivotal Fund Limited
(Incorporated in the Republic of South Africa)
(Registration number 2005/030215/06)
(JSE share code: PIV)
(ISIN: ZAE000196440)
(“Pivotal” or “the company”)
ABRIDGED PROSPECTUS – OPENING OF OFFER TO INVITED INVESTORS TO SUBSCRIBE FOR SHARES AND LISTING OF PIVOTAL ON THE JSE LIMITED
Abridged prospectus relating to:
- a private placement (“the private placement”) to raise up to approximately R1 billion by way of an offer for
subscription to invited investors for up to 58 823 529 private placement shares (“private placement shares”) in
the company at an indicative issue price of R17.00 per private placement share; and
- the subsequent listing of all the ordinary shares of the company in the “Real Estate – Real Estate Holdings and
Development” sector of the JSE (“listing”).
This abridged prospectus is not an invitation to the public to subscribe for shares in Pivotal. It is issued in
compliance with the JSE Listings Requirements and the Companies Act for the purpose of providing
information to the public regarding Pivotal and to provide information to select investors with regards to the
private placement.
Invited investors will be contacted by and will receive application forms to participate in the private placement
from the joint bookrunners.
This announcement contains the salient information in respect of Pivotal, which is more fully described in the
prospectus which will be made available to invited investors from today. For a full appreciation and understanding of
Pivotal, the private placement and the listing, the prospectus should be read in its entirety.
Terms defined in the prospectus bear the same meaning in this abridged prospectus.
1. Introduction
The JSE has granted Pivotal a listing of up to 300 076 188 ordinary shares in the “Real Estate – Real Estate
Holdings and Development” sector of the JSE, in terms of the FTSE classification, under the abbreviated name:
“Pivotal”, JSE ordinary share code: “PIV” and ISIN: ZAE000196440, with effect from the commencement of
trade on Monday, 8 December 2014.
2. History and nature of business
Incorporated as a public company in 2005 by Abland (Proprietary) Limited (“Abland”) and its strategic
partners Pivotal has, since 2009, been an unlisted property investment and development company. The group
has an A-grade office and retail property portfolio, divided into completed income producing properties and
developments (including the current developments and the future developments). Pivotal focuses on creating
sustainable value for its investors by achieving above average growth in the capital value of its portfolio.
The portfolio of income producing properties is currently valued at approximately R7.8 billion. Pivotal focuses
on maintaining the value of these properties through constant maintenance and upgrades, optimal tenant mix
and enhancing low vacancy levels. The income generated from the income producing properties is re-invested
into value-enhancing property upgrades, acquisitions and developments. Given that the majority of its income is
intended for re-investment, Pivotal’s current dividend policy is not to make any distributions to shareholders.
The developments currently comprise approximately R714 million worth of properties that are either in, or held
for, development. It is estimated that, when complete, the value of the developments will be approximately
R5.7 billion. Of this, approximately R470 million with an estimated value on completion of R2.4 billion is
currently in development and R244 million with an estimated value on completion of R3.3 billion represents
future developments.
In addition, Pivotal has a “secured pipeline” of developments. The secured pipeline comprises properties (or
undivided shares in properties) acquired by Pivotal for development with a component of deferred consideration
that is calculated with reference to the value of the developed property after the development is complete. This
mechanism, which is described more fully in the prospectus, allows the development partners to share in
development risk and reward in relation to a particular development. The development partners are also
required to procure or provide all necessary funding for the secured pipeline on a basis that the rights to
recourse on the funding is limited to the secured pipeline.
3. Investment and growth strategy
Pivotal’s key objectives are to:
- provide shareholders with superior investment growth based on sound investment principles and structure;
- maximise growth of the portfolio (both in absolute terms and at a net asset value per share level) through
development and acquisitions, without diluting quality;
- maintain the asset quality, low vacancy levels and low tenant turnover ratios in its income producing
portfolio; and
- provide proactive asset and property management driven by an ownership-centred approach.
4. Prospects
Pivotal has achieved growth in net asset value per share, excluding deferred tax, of 45% for the year ended
28 February 2014 and average annual growth in net asset value per share, excluding deferred tax, since 2009 of
24%. The table below sets out the net asset value per share and the growth in net asset value per share for the
years ending 28 February 2010 to 28 February 2014.
Year 2010 2011 2012 2013 2014
Net asset value per share (R) 6.28 7.44 8.56 10.14 14.69
Growth in net asset value per share (%) 25.6 18.5 15.1 24.8 45
Pivotal has an A-grade portfolio with low levels of arrears, low vacancy levels and high tenant retention that is
considered by the board to be highly robust. Although the property sector remains in a slow growth phase, the
developments represent significant potential for value growth.
The company’s strategic partnerships and joint ventures with Abland and other developers should ensure a
continued pipeline of high quality, value adding development opportunities that meet the company’s investment
criteria. The improved access to capital resulting from the listing should enhance Pivotal’s ability to pursue
these opportunities when they arise in order to continue to generate growth for investors.
All significant developments undertaken by the company are substantially de-risked through development based
on demand. The potential negative impact of an increasing interest rate cycle is partially mitigated through a
conservative interest rate hedging policy (with over 80% of the company’s debt hedged for a weighted average
length of 4 years).
As part of its investment strategy, Pivotal intends to incorporate a significant African component into its
portfolio over the next 5 years, through the establishment of a dedicated African fund in partnership with
Abland, Standard Bank and Mara Africa. The partners are already working on a pipeline of assets in various
countries, including a proposed shareholding in a Mauritian Real Estate investment vehicle (“Newco”) to be
managed by the Standard Bank Group. It is proposed that Newco will hold a significant stake in the Wings
Office Complex development in Lagos, Nigeria, in respect of which a conditional MOU has been concluded
and which acquisition is subject to the necessary approvals required to facilitate the acquisition of this asset.
Pivotal’s current policy is to limit its African exposure to 15% of total net assets and any investment will be
subject to the necessary Exchange Control approvals.
In the circumstances the board is of the view that Pivotal is well positioned to continue to achieve strong above-
average growth going forward.
5. Directors
Name and age Tom Wixley (Thomas Alexander Wixley) (74)
Business address 25 Rutland Road, Parkwood, 2193
Qualification BCom, CA(SA)
Position Independent non-executive chairman
Name and age Jackie van Niekerk (Jacqueline Rouxanne van Niekerk) (31)
Business address Abcon House, Fairway Office Park, 52 Grosvenor, Bryanston, 2021
Qualification BCom
Position Chief executive officer
Name and age Aaron Suckerman (29)
Business address Abcon House, Fairway Office Park, 52 Grosvenor, Bryanston, 2021
Qualification Bcom (Acc), ACCA UK
Position Financial director
Name and age Dave Savage (David Stanley Savage) (50)
Business address Abcon House, Fairway Office Park, 52 Grosvenor, Bryanston, 2021
Qualification BSc (Building) and MSc (Building Project Management)
Position Executive director
Name and age Thys Neser (Matthys Stefanus Benjamin Neser) (58)
Business address Abcon House, Fairway Office Park, 52 Grosvenor, Bryanston, 2021
Qualification BSc (Building Management), MBA
Position Non-executive director
Name and age Stewart Shaw-Taylor (62)
Business address Standard Bank, 4th Floor, West Wing, 30 Baker Street, Rosebank
Qualification CA (SA), Harvard PMD
Position Non-executive director
Name and age Angus Mackay (James Angus Mackay) (61)
Business address Retail Africa, Ground Floor, Slade House, Boundary Terraces, 1 Mariendahl Lane,
Newlands, Cape Town
Qualification B.Com, CTA, AGA (SA)
Position Non-executive director
Name and age Marc Wainer (66)
Business address 2 Arnold Road, Rosebank, 2196
Qualification Matric
Position Independent non-executive director
Name and age Thando Sishuba (Thanduxolo Selby Sishuba) (44)
Business address Imperial Properties, 1st Floor Corporate Park, 4/6 Skeen Boulevard, Bedfordview
Qualification BSc Hons (Land Management) and MSc (Property Investment)
Position Independent non-executive director
Name and age Tony Dixon (Anthony David Dixon) (68)
Business address 1 The Rushes, Hoylake Village, Mount Edgecombe Country Club, Durban, KwaZulu
Natal, 4300
Qualification CA(SA); EDP (Wits) F inst D
Position Independent non-executive director
Name and age Chris Ewing (Christopher Haig Ewing) (65)
Business address 1 Protea Place (C/O Fredman & Protea Place), Sandton, Johannesburg, 2196, South
Africa
Qualification BCom LLB (Wits)
Position Independent non-executive director
All of the directors are South African nationals
6. Asset management
Historically, Pivotal had outsourced its asset management services to Pivotman (Proprietary) Limited
(“Pivotman”). In line with what it considers to be international best practice for a company of the size of
Pivotal and to align the interests of the asset management executives with those of the company and its
shareholders, the board took the strategic decision to internalise the asset management function through the
acquisition of 100% of Pivotman. Operationally this was implemented from 1 September 2014 and the terms of
the agreement in this regard are summarised in the prospectus.
Pivotman will continue to provide asset management services to Abland in respect of its property portfolio, in
terms of a separate asset management agreement, and on market-related terms and conditions.
7. Property management
The property management function of the group is outsourced on market related terms to Abreal (Proprietary)
Limited, Broll Property Group Proprietary Limited, Bridgeport Property Administration Proprietary Limited
and Encha Property Service Proprietary Limited.
8. Summarised forecast information
Given the nature of its business, Pivotal uses net asset value per share as its key performance measure as it is
considered a more relevant performance measure than earnings or headline earnings per share.
Set out below are the summarised forecast statements of comprehensive income (“summarised forecasts”) for
the years ending 28 February 2015 and 29 February 2016 (“forecast periods”). The forecast information is
based on the assumption that R1 billion is raised through the issue of 58 823 529 ordinary shares at an
indicative issue price of R17.00 per private placement share pursuant to the private placement in
December 2014.
The summarised forecasts comprise actual figures for the six months ended 31 August 2014 and forecast figures
for the remainder of the forecast periods.
The summarised forecasts, including the assumptions on which they are based and the financial information
from which they are prepared, are the responsibility of the directors of Pivotal.
The summarised forecasts have been prepared in compliance with IFRS and in accordance with Pivotal’s
accounting policies.
Year ending Year ending
28 February 2015 29 February 2016
R’000 R’000
Earnings and diluted earnings per ordinary share (cents) 105.9 97.7
Headline earnings and diluted headline earnings per ordinary share (cents) 82.2 97.7
Weighted average ordinary shares in issue – thousands 195 533 300 076
Number of shares in issue at period-end 300 076 300 076
The figures set out above are extracted from detailed forecasts for the years ending 28 February 2015 and
29 February 2016 and have been reported on by the independent reporting accountant, Grant Thornton (Jhb)
Inc. The detailed forecasts, the independent reporting accountants’ report on the detailed forecast and the
assumptions on which the detailed forecasts are based, are set out in the prospectus.
9. Details of the private placement
The private placement will be constituted by the issue of approximately 58 823 529 ordinary shares in the
company at an issue price to be determined by demand and for which an indicative issue price of R17.00 per
private placement share has been used in the prospectus.
The directors may increase the number of shares offered in terms of the private placement depending on the
level of demand.
There are no convertibility or redemption provisions relating to the private placement shares being offered in
terms of the private placement. Private placement shares will be issued in dematerialised form only. No
fractions of private placement shares will be issued pursuant to the private placement. The private placement
will not be underwritten.
Applications in terms of the private placement must be for a minimum of R100 000 per invited investor.
The private placement shares issued in terms of this prospectus will be allotted subject to the provisions of the
MOI and will rank pari passu in all respects, including distributions, with all existing issued shares in the
company.
The private placement is open to invited investors only. The following parties may not participate in the private
placement:
- any person who may not lawfully participate in the private placement; and/or
- any investor who has not been invited to participate; and/or
- any person acting on behalf of a minor or deceased estate.
10. Purpose of the private placement and the listing
The main purposes of the private placement and the listing are to:
- provide investors, both institutional and private, with an opportunity to participate over the long-term in the
income streams and future capital growth of the company;
- enhance the liquidity and tradability of the shares;
- provide the company with a platform to raise funding to pursue growth and investment opportunities in the
future; and
- enhance the public profile and general public awareness of Pivotal.
11. Salient dates and times
2014
Opening date of the private placement (09:00) Tuesday, 25 November
Closing date of the private placement (12:00) Monday, 1 December
Results of the private placement released on SENS on Tuesday, 2 December
Notification of allotments to successful invited investors from Wednesday, 3 December
Results of the private placement published in the press on Wednesday, 3 December
Listing of shares and the commencement of trading on the JSE (09:00) on Monday, 8 December
Accounts at CSDP or broker updated and debited in respect of dematerialised Monday, 8 December
shareholders
Notes:
1 All references to dates and times are to local dates and times in South Africa. These dates and times are
subject to amendment. Any such amendment will be released on SENS and published in the press.
2 Invited investors 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.
3 CSDPs effect payment on a delivery-versus-payment basis.
12. Application of proceeds
The proceeds of the private placement will be applied as follows:
- R28 595 754 will be used to defray the preliminary and issue expenses; and
- the balance will be used to partly finance the acquisition of the SBP properties as set out in the prospectus.
13. Conditions to which the private placement and the listing are subject:
- the achievement of a spread of shareholders acceptable to the JSE, being a minimum of 20% of the issued
share capital of the company being held by public shareholders to ensure reasonable liquidity. As at the last
practical date, Pivotal meets these requirements and expects to do so after the private placement; and
- a minimum amount of R500 million being raised in terms of the private placement, which condition may
be waived or relaxed by the board.
If the conditions to the listing are not fulfilled, the private placement and any acceptance thereof shall not be of
any force or effect and no person shall have claim whatsoever against Pivotal or any other person as a result of
the failure of any condition.
14. Availability of the prospectus and the investor presentation
Copies of the prospectus and the document presented to invited investors (“investor presentation”) may be
obtained between 08:30 and 17:00 on business days from Tuesday, 25 November 2014 to Monday,
8 December 2014 at the following places and on the company’s website: www.pivotalfund.co.za. The investor
presentation contains no material or significant information over and above that contained in the prospectus.
- The Pivotal Fund Limited
Abcon House, Fairway Office Park, 52 Grosvenor Road, Bryanston, 2021.
- Java Capital Trustees and Sponsors Proprietary Limited
2 Arnold Road, Rosebank, Johannesburg, 2196.
- The Standard Bank of South Africa Limited
30 Baker Street, Rosebank, 2196.
- Computershare Investor Services (Proprietary) Limited
Ground Floor, 70 Marshall Street, Johannesburg, 2001.
Corporate advisor, sponsor and joint bookrunner
Java Capital
Joint bookrunner
Standard Bank
Independent reporting accountants and auditors
Grant Thornton
Attorneys
DLA Cliffe Dekker Hofmeyr
Tax advisors
ENS Africa
25 November 2014
Date: 25/11/2014 08:55:00 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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