Wrap Text
Abridged Pre-listing Statement and opening of Offer to Qualifying Investors
Brainworks Limited
(Incorporated in the Republic of Mauritius)
(Registration number: 115883 C1/GBL)
(Date of registration: 22 April 2013)
Share Code: BWZ ISIN: MU0548S00000
(“Brainworks” or “the Company”)
ABRIDGED PRE-LISTING STATEMENT AND OPENING OF OFFER TO QUALIFYING INVESTORS
NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA, CANADA, JAPAN OR AUSTRALIA OR
ANY OTHER JURISDICTION WHERE IT MAY BE UNLAWFUL TO DISTRIBUTE THIS
ANNOUNCEMENT.
Capitalised words and expressions used in this abridged Pre-listing Statement shall, unless expressly
defined herein or indicated otherwise by the context, bear the meanings given to them in the Pre-listing
Statement referred to below.
This abridged Pre-listing Statement relates to the listing of Brainworks in the “Equity Investment
Instruments” sector of the Main Board of the Johannesburg Stock Exchange (“JSE”), with effect from the
commencement of trade on 13 October 2017 (“the Listing”) and the Offer to Qualifying Investors to (i)
purchase up to 10,680,555 shares and (ii) subscribe for 16,843,396 ordinary shares (collectively, the
“Offer Shares”) in the Company (“the Offer”).
The Offer is not an offer to the general public and only constitutes an Offer for the subscription and/or sale
of Offer Shares to Qualifying Investors.
The information in this abridged Pre-listing Statement has been extracted, in summarised form, from the full
Pre-listing Statement issued by Brainworks on 28 September 2017. This abridged Pre-listing Statement is
not complete and does not contain all of the information that investors should consider before purchasing,
or subscribing for, the Offer Shares. Prospective investors should read the Pre-listing Statement in its
entirety.
This abridged Pre-listing Statement is not and shall not constitute an offer, or an invitation or solicitation, to
the public to acquire the Offer Shares in any jurisdiction, and is issued in compliance with the Listings
Requirements:
- for the purpose of providing information regarding the Company pursuant to the Offer;
- as an invitation to Qualifying Investors to subscribe for, or purchase, the Offer Shares at R11.50
per Share (equal to US$0.90 at an exchange rate of 12.78 (“the Exchange Rate”)), for the
purpose of raising approximately R317 million (equal to US$24.8 million at the Exchange Rate) in
aggregate; and
- for the subsequent Listing of all the issued Shares of the Company in the “Equity Investment
Instruments” sector of the Main Board of the JSE.
1. LISTING AND OFFER PARTICULARS
The JSE has granted the Company a Listing of all of its issued Shares, under the abbreviated name:
“Brainwrks”, JSE share code: BWZ and ISIN: MU0548S00000.
The price at which the Offer Shares will be offered for subscription, or sale, will be R11.50 per Offer
share.
There is no minimum capital requirement to be realised by the Offer. Applications pursuant to the
Offer must be for a minimum of R1,000,000.
2. SALIENT DATES AND TIMES
2017
Opening date of the Offer at 09:00 on Thursday, 28 September
Closing date of the Offer at 12:00 on(2) Monday, 9 October
Successful Applicants will be advised of their allotment on Wednesday, 11 October
Results of the Offer released on SENS on Wednesday, 11 October
Accounts at CSDP or broker updated and debited in respect of Friday, 13 October
dematerialised shareholders on(3)
Listing of Brainworks Shares on the JSE from the commencement of Friday, 13 October
trade at 09:00 on
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.
2. Investors must advise their CSDP or broker of their acceptance of the Offer Shares in the manner and cut-
off time stipulated by their CSDP or broker.
3. CSDPs effect payment on a delivery-versus-payment basis.
3. HISTORY AND DESCRIPTION OF BRAINWORKS
Brainworks is a Mauritian registered investment holding company, with its investment base focused
on the Zimbabwean hospitality, real estate, financial services and logistics sectors.
Investments include:
- a 57.67% investment in African Sun Limited (“African Sun”), a hospitality management company
listed on the Zimbabwe Stock Exchange (“ZSE”), with seven resort hotels, four city hotels and
two casinos under its management, the majority of which are owned by Dawn Properties Limited;
- a 66.81% investment in Dawn Properties Limited (“Dawn Properties”), a real-estate investment
holding, development and property consulting services company listed on the ZSE, with a
property portfolio valued in excess of US$89.6 million (gross), consisting primarily of hospitality
assets, land under development and land held for development;
- a 31.14% investment in GetBucks Microfinance Bank Limited (“GetBucks”), a technology driven
deposit-taking and money-lending micro-finance institution;
- 49% in Coporeti Support Services (Private) Limited t/a GetCash (“GetCash”), a mobile money
transfer platform whereby each customer’s cell-phone functions as a bank account, creating a
“mobile wallet”;
- a 100% investment in GetSure Life Assurance (Private) Limited (“GetSure”), a licensed
insurance company offering life insurance, funeral cover and other accident and savings
insurance products;
- a 2.5% investment in MyBucks S.A. (“MyBucks”), a FinTech company listed on the Frankfurt
Stock Exchange, with operations in Africa and Europe;
- a 100% investment in Skyclear Investments (Private) Limited (“Skyclear”), which holds 0.87
hectares of undeveloped land, earmarked for commercial property development; and
- a 100% investment in FML Logistics (Private) Limited (“FML Logistics”), a petroleum transport
company operating in Zimbabwe, Zambia and the Democratic Republic of Congo.
Hospitality
African Sun is a hospitality management group listed on the ZSE with a market capitalisation of
US$17.24 million as at the Last Practicable Date. African Sun dominates many of Zimbabwe’s
premier tourist destinations, as well as in the four major cities in Zimbabwe.
Hotels are operated under four brand categories:
- Legacy Hotels – five of the African Sun hotels are managed by Legacy, an internationally
acclaimed hotel manager;
- IHG Hotels – three hotels operate under the IHG brand, a world leading hotel company
which franchises the Holiday Inn brand in Zimbabwe;
- Owner-managed Hotels – two African Sun hotels are operated under their own name,
without an international franchise brand association; and
- The Victoria Falls Hotel – an affiliate of the Leading Hotels of the World and operated in
partnership with Meikles.
As at 31 December 2016, African Sun had a total net asset value of US$6.66 million and had
reported a total profit before income tax of US$4.84 million for the year ended 31 December
2016.
Real estate investment holding and development
Investment in Dawn Properties
Dawn Properties is a ZSE listed real estate investment, development and consulting company,
with a market capitalisation of US$51.60 million as at the Last Practicable Date.
Revenue is generated by Dawn Properties from three main sources:
i) Rental income: Dawn Properties owns seven operational hotel properties, two
timeshare unit complexes, and the Kariba Marine Land together, valued at US$67.60 million
by the Independent Property Valuer. Operating hotels are leased to African Sun under long
term operating leases. Rental revenue earned for the 2016 financial period totalled
US$2.4 million.
ii) Profits from development of vacant land: Dawn Properties owns approximately 583
hectares of land under development and undeveloped land, including two non-operational
hotel buildings, valued at US$19.56 million by the Independent Property Valuer. The land is
currently earmarked mainly for residential development with some commercial
developments expected in the future. One development is currently underway, being a
residential complex with 58 units.
iii) Property consulting fees: Consulting services offered by Dawn Properties include property
valuations, property management services, project management and agency services.
As at 31 December 2016, Dawn Properties had a total net asset value of US$84.54 million and
reported a total profit before income tax of US$1.67 million for the year ended 31 December
2016.
Investment in Skyclear
Skyclear owns a piece of undeveloped commercial land in Borrowdale, Harare, which is one of
Harare’s prime locations and fast developing commercial office precinct. The land, measured at
0.87 hectares, has been earmarked for the development of an office park and is valued at
US$1.50 million by the Independent Property Valuer.
Financial Services
Brainworks owns 31.14% of GetBucks, 49% of GetCash and 100% of GetSure, the majority
shareholder in the first two being MyBucks, which focuses on distributing financial products
through online platforms. The GetBucks, GetCash and GetSure products offered to customers
are complementary and therefore provide a platform for cross selling of products across all three
divisions.
GetBucks
GetBucks is a technology driven deposit-taking and money-lending micro-finance institution,
operational for the past four years, and was listed on the ZSE in January 2016.
The GetBucks vision is to achieve financial inclusion in all its markets by breaking the paradigm
of clients having to visit a bank branch to access services. The ultimate goal is to deliver a basket
of financial products that meet most of the financial needs of customers across geographies.
Current services offered range from micro-finance loans, a mortgage product, SME banking
products and saving and money market accounts.
As at 31 December 2016, GetBucks had disbursed over 67 322 loans, amounting to over
US$37,164 million, since its inception in 2011, with an average year-on-year growth rate of 60%.
GetBucks operates in 14 locations across Zimbabwe and employs 65 employees, with a further
173 agents stationed across Zimbabwe.
GetBucks reported a total revenue of US$13 million, and a profit before income tax of
US$4.21 million for the financial year ended 30 June 2016, and profit before income tax of
US$2.36 million for the half year ended 31 December 2016.
GetCash
GetCash is a mobile money transfer platform whereby each customer’s cell-phone functions as a
bank account, creating a “mobile wallet”. GetCash commenced operations in August 2012,
initially under the brand NettCash.
GetCash is aimed at addressing liquidity constraints in Zimbabwe by removing the need for cash
transactions at merchants throughout Zimbabwe. Agents stationed throughout cities in Zimbabwe
enable customers to deposit cash in exchange for credit in their mobile wallets.
Services offered by GetCash include peer-to-peer services, remittances, bill and merchant
payments, bulk payments and the sale of prepaid electricity vouchers.
GetSure
GetSure is a licensed life assurance company, offering life insurance, funeral cover and accident
and savings insurance products. GetSure was granted its operating licence in December 2014
and commenced operations in August 2015.
In the year ended 31 December 2016, GetSure’s first twelve-month trading period, revenue
equalled US$1.06 million and the claims ratio was 6.6%.
Logistics
Brainworks holds 100% of FML Logistics, a petroleum products transportation company with 30
trucks, operating in Zimbabwe and delivering fuel from Beira, Mozambique to Zimbabwe, Zambia
and the Democratic Republic of Congo.
As at 31 December 2016, FML Logistics had a total net asset value of US$1.27 million and
reported a loss before income tax of US$655k for the 2016 financial year.
4. BRAINWORKS INVESTMENT CASE
The Brainworks Group offers an investment opportunity for investors, given that:
- it offers exposure to a Zimbabwe-focused diversified portfolio, through a single point of entry on
an international exchange, without the risks associated with direct investment into Zimbabwe;
- provides South African investors with a Rand-hedge;
- provides prospective investors with an opportunity to invest in an emerging market that
potentially offers higher returns than developed markets;
- the potential recovery of the economic and political climate in Zimbabwe would substantially
enhance the prospects of the Group. The investment opportunity therefore offers prospective
investors with ground floor access to a potentially recovering emerging market;
- the Group’s strategic direction and growth is driven by a highly experienced and skilled board of
directors, together with a highly capable in-country management team;
- approximately 38% of revenue is generated from international sources, through African
Sun;
- the Group has partnered with well-established international players that add value to operations;
- existing investments have been restructured to be profit generating and sustainable despite
abnormally low levels of economic activity;
- a number of Zimbabwe government initiatives are being undertaken to support economic growth;
and
- a pipeline of opportunities has been identified to ensure organic growth and through future
acquisitions for the Group.
5. STRATEGY AND INVESTMENT POLICY
The Company’s business strategy is to set up or selectively identify and acquire control or strategic equity
stakes in attractive companies that are active in growth sectors primarily in Zimbabwe.
The Company applies a private equity model to investing, focusing on board and managerial control and
active shareholders’ participation in all investee companies.
The Company’s ethos is to retain its hold in investee companies which show strong and sustainable cash
generation capacity and dividend pay-outs to shareholders for the long term, as well as entities with strong
brand potential, allowing it to attract reputable international operating partners who will invest alongside, or
partner with Brainworks, to facilitate the unlocking of shareholder value and enhance profitability.
6. OVERALL FINANCIAL INDICATORS
Brainworks has consolidated gross assets of US$157.5 million and a total net asset value of
US$65.3 million (excluding minority interest) as at 31 December 2016.
For the year ended 31 December 2016, the Group reported total revenue of US$48.1 million and
profit before income tax from continuing operations of US$4.4 million.
7. RATIONALE FOR LISTING
The main purpose of the Offer and the Listing is to:
- raise capital in order to reduce interest bearing debt, thereby strengthening the Company’s balance
sheet for expansion of current investments;
- provide access to funding from the South African equity capital markets in order to facilitate and
accelerate the Group’s organic and acquisitive growth;
- provide Shareholders with a liquid, tradable instrument within a regulated environment;
- raise the Group’s profile with lending institutions and access beneficial financing terms available to
listed entities; and
- create awareness with prospective institutional and retail investors about the merits of investing in
the Company.
8. APPLICATION OF PROCEEDS
The proceeds of the Offer will be used by Brainworks to settle interest bearing debt, which will strengthen
the Group’s balance sheet and position it for growth going forward, and will be invested in its current
investee assets to enhance future revenue generation and profitability, as well as the payment of Listing
expenses.
9. DIRECTORS
The details of the Directors are set out below:
Name Nationality Business Address Occupation/function
Simon Frederick British 4th Floor, La Croisette, Grand Non-executive chairman
William Village Baie, Mauritius
Martin John Wood British Business address:4 College Lead independent non-
Hill, London EC4R 2RB, UK executive director and deputy
chairperson
Brett Ivor Childs British Business address C2-401, 4th Chief Executive Officer
Floor, La Croisette, Grand
Baie, Mauritius
Peter Saungweme Zimbabwean 4 Arden Road, Newlands, Chief Finance Officer
Harare, Zimbabwe
Audrey South African 24 Peter Place, Lyme Park, Independent non-executive
Mamoshoeshoe Bryanston , 2191, South Africa director
Mothupi
George Sidney South African 4th Floor, La Croisette, Grand Independent non-executive
John Bennett Baie, Mauritius director
Richard Nicholas British C2-401, 4th Floor, Grand Baie Independent non-executive
Charrington La Croisette, Grand Baie, director
Mauritius
Richard Godfrey Zimbabwean 118 McChlery Avenue, Non-executive director
Muirimi Eastlea, Harare
George Manyere Zimbabwean 4 Arden Road, Newlands, Non-executive director
Harare, Zimbabwe
Walter Kambwanji Zimbabwean 4 Arden Road, Newlands, Non-executive director
Harare, Zimbabwe
10. CONDITIONS TO THE LISTING
The Listing is subject to the Company achieving a spread of public shareholders acceptable to the JSE at
the time of Listing on the Main Board of the JSE, being public shareholders holding not less than 20% of
the issued share capital of the Company to ensure reasonable liquidity.
As at the Last Practicable Date, the Company had a public spread of 20.74%.
If the above condition precedent is not met, the Offer and any acceptance thereof shall not be of any force
or effect and no person shall have any claim whatsoever against Brainworks or any other person as a
result of the failure of any condition.
11. COPIES OF THE PRE-LISTING STATEMENT
The Pre-listing Statement is only available in English and copies thereof may be obtained by
Qualifying Investors during normal business hours from Thursday, 28 September until Friday, 13
October 2017, from Brainworks and Questco at their respective physical addresses which appear
below:
Brainworks Limited Questco Proprietary Limited
Level 2, Alexander House 1st Floor Yellowwood House
Silicon Avenue Ballywoods Office Park
Ebène Cybercity 33 Ballyclare drive
72201 Bryanston
Republic of Mauritius 2191
The Pre-listing Statement will also be available on Brainworks' website at www.brainworkscapital.com.
Ebène, Mauritius
28 September 2017
Corporate Advisor, Bookrunner and JSE Independent Reporting Accountants and JSE
Sponsor Auditors
Questco Proprietary Limited PricewaterhouseCoopers Inc.
Legal Advisers – South Africa Legal Advisers – Mauritius
Bowman Gilfillan Inc. Eversheds – Sutherland
Independent Property Valuer Investor Relations Advisor
Propval Property Valuation Services Proprietary Singular Systems Proprietary Limited
Limited
Company Secretary Transfer Secretary
Imara Trust Company (Mauritius) Limited Computershare Investor Services
Proprietary Limited
Date: 28/09/2017 09:35:00 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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