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SANDOWN CAPITAL LIMITED - Abridged Pre-Listing Statement

Release Date: 14/11/2017 16:36
Code(s): SDC     PDF:  
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Abridged Pre-Listing Statement

SANDOWN CAPITAL LIMITED
(Incorporated in South Africa)
(Registration number 2000/013674/06)
JSE share code: SDC
ISIN: ZAE000249645
(“Sandown Capital” or “the company”)


ABRIDGED PRE-LISTING STATEMENT


This abridged pre-listing statement is not an invitation to the public to subscribe for shares. It is issued in compliance
with the JSE Listings Requirements for the purpose of giving information to shareholders of Peregrine Holdings
Limited (“Peregrine”) regarding Sandown Capital and the listing of 226 065 696 (two hundred and twenty-six
million, sixty-five thousand, six hundred and ninety-six) ordinary shares of no par value in the “Equity Investments”
sector on the Main Board of the JSE.

This announcement contains the salient information in respect of Sandown Capital which is more fully described in
the pre-listing statement (“pre-listing statement”) issued to Peregrine shareholders on Tuesday, 14 November 2017.
For a full appreciation and understanding of Sandown Capital the pre-listing statement should be read in its entirety.

Terms defined in the pre-listing statement bear the same meaning in this abridged pre-listing statement.

1.    Introduction

      Sandown Capital, a wholly-owned subsidiary of Peregrine prior to the unbundling, was incorporated in South
      Africa on 28 June 2000 as PGR 29 Investments Proprietary Limited and was converted to a public company on
      11 September 2017.

      The JSE has granted Sandown Capital a listing of all of its issued ordinary shares in the “Equity Investments”
      sector on the Main Board of the JSE, with effect from the commencement of trade on Wednesday,
      29 November 2017, under the abbreviated name: “SandownCp”, JSE share code: “SDC” and ISIN:
      ZAE000249645. Sandown Capital will list as an investment entity in terms of section 15 of the Listings
      Requirements.

2.    Overview of Sandown Capital

      Sandown Capital is an investment holding company that aims to create long-term value for shareholders
      through targeting selected investment opportunities which meet its investment strategy.

      The members of the Sandown Capital board of directors are experienced investors who have successfully
      concluded and realised investments across different industries and sectors, both within South Africa and
      internationally. The board includes Sean Melnick, the founder and non-executive chairman of Peregrine and a
      respected businessman and deal maker. In sourcing, managing and realising investment opportunities, the
      company will utilise the investment skills and established networks of the board, complemented by a highly-
      experienced investment management team.

      Sandown Management Limited (the “investment manager”) has been appointed by Sandown Capital to
      manage the investment of the company’s assets and to provide ongoing advice and assistance that will enable
      the company to achieve its investment objectives.

3.    Investment strategy

      Sandown Capital will seek to create long term value for its shareholders by sourcing and holding investment
      opportunities which the board feels are capable, over time, of producing compound annual growth in excess of
      its minimum targeted return of 15% per annum.

      Sandown Capital will seek to capitalise on its status as a permanent capital vehicle by patiently seeking out a
      small number of investment opportunities that are capable of producing extraordinary compound returns over
      time without being deterred by potential volatility or variability of returns on those investments in the shorter
      term. Whilst, as a listed entity, the effects of this volatility may impact the company’s income statement from
      time to time, the litmus test for each investment will remain its ability to provide a sustainable above-hurdle
      level of compound returns in order to meet the board’s strategic imperative of achieving long-term growth in
      net asset value (“NAV”) per share.

      The current portfolio composition is effectively an inherited one, being assets held by Sandown Capital and the
      surplus assets unbundled from the Peregrine group. Whilst the board are comfortable that the current portfolio
      of hedge funds, direct property and listed property units as well as a funding stake into a South African
      corporate through a black economic empowerment vehicle, is capable of generating acceptable long-term
      growth in NAV per share, it is anticipated that the current portfolio will, over the next few years and in a stable,
      measured manner as divestment opportunities arise, be realigned with the intention being to seek out fresh
      opportunities across a wider investment landscape, encompassing listed as well as unlisted opportunities.

      The geographical split of Sandown Capital’s investment portfolio, on a net asset value basis, is currently 30%
      South Africa and 70% invested internationally. It is envisaged that the majority of new opportunities will
      continue to be internationally focussed.

      Shareholders should be aware that strategically there is a preference for investing in a few, high conviction
      opportunities rather than building a more diversified portfolio. In principle, Sandown Capital would prefer to be
      a meaningful cornerstone investor, actively engaging with management and adding strategic value rather than
      be a holder of passive investment stakes. The deployment of permanent capital is seen as a clear advantage in
      the pursuit of this strategy.

      The company intends utilising leverage, where appropriate to augment its long-term returns. It also intends
      retaining and reinvesting all net income from its investments in pursuit of this aim. To the extent that attractive
      investment opportunities arise that are beyond current balance sheet capabilities, the company would seek to
      raise further capital from shareholders.

4.    Benefits of investment strategy

      The implementation of the above investment strategy will allow Sandown Capital shareholders to access a
      portfolio of high-quality, sector and geographically diversified investments designed to produce superior returns
      over the long term. The mix of listed and unlisted investments, together with the ability to utilise debt and
      equity capital where appropriate, and a focus on NAV per share growth, is designed to build shareholders value.

5.    Directors

      Director name, age and                               Qualification
      nationality                Role                                               Business address
      Lawrie Zev Brozin (61)     Independent non-          B.Comm, B.Acc,           6A Sandown Valley Crescent,
      South African              executive                 CA(SA)                   Sandown, Sandton, 2196
                                 chairman
      Sean Alan Melnick (48)     Chief Executive           B.Com (Hons), CFA        6A Sandown Valley Crescent,
      British/South African      Officer                                            Sandown, Sandton, 2196
      Sean Kevin Jelley (52)     Chief Financial           B.Comm, G.Dip.Acc        6A Sandown Valley Crescent,
      British/South African      Officer                   CA(SA)                   Sandown, Sandton, 2196
      Duncan James Randall (43)  Independent non-          B.Arts (African          6A Sandown Valley Crescent,
      South African              executive director        (Politics) Oxford.       Sandown, Sandton, 2196
      Andrew James               Independent non-          Politics), DPhil         6A Sandown Valley Crescent, 
      Hannington (61)            executive director        B.Comm (Hons), CTA,      Sandown, Sandton, 2196
      South African                                        CA(SA)                   
      Mandy Yachad (56)          Non-executive             B.Comm, LLB              6A Sandown Valley Crescent,
      South African              director                                           Sandown, Sandton, 2196

6.    Investment manager

      Sandown Capital has entered into an investment management agreement with the investment manager, in terms
      of which the investment manager has been appointed, on an exclusive basis, to identify and recommend
      investment opportunities that meet the criteria set out in the company’s investment strategy. Where the
      company elects to pursue investment opportunities, the investment manager will do all things necessary to
      execute such investments, including managing the due diligence process. The investment manager will provide
      ongoing advice for the period that the investment is held by the company, reporting on the status and value of
      each investment at regular intervals, as agreed with the board. When the company decides to dispose of an
      investment, the investment manager will manage the disposal process on behalf of the company.

      In return for providing these services, the investment manager will charge the company an annual investment
      fee, payable, quarterly in advance, of the greater of R16 000 000 or 0.95% of the company’s annual average net
      asset value. In addition, the company will, subject to the compound average growth rate of the net asset value
      per share of the company being equal to or exceeding a hurdle rate of 15% since commencement of the
      investment management agreement, pay the investment manager a performance fee equal to 10% of the growth
      in net asset value achieved since commencement, less any performance fees paid in prior periods. The first
      measurement period for the performance fee runs from the commencement date to 31 March 2019, and
      thereafter is calculated annually. The investment manager may elect to apply the full amount of any
      performance fee received to acquire ordinary shares in the company at a price per share equal to the audited
      published net asset value per share of the company as determined at the end of the period to which the
      performance fee relates.

7.    Share capital and NAV

      Immediately prior to and after listing:

      -     the authorised share capital of Sandown Capital will comprise of 500 000 000 ordinary shares of no par
            value;
      -     the issued share capital of Sandown Capital will comprise of 226 065 696 ordinary shares of no par
            value; and
      -     there will be no treasury shares in issue.

      As at 31 October 2017, Sandown Capital had an NAV of R1 265 985 000 and a NAV per share of R5.60.
      These figures are estimates as per the JSE Listings Requirements paragraph 8.40 and Sandown Capital would
      accordingly like to advise shareholders that this information has not been reviewed or reported on by Sandown
      Capital’s auditors and is the responsibility of the directors of Sandown Capital.

8.    Salient dates and times

                                                                                                                       2017
      Peregrine unbundling circular issued to Peregrine shareholders, together with this
      pre-listing statement                                                                            Tuesday, 14 November
      Abridged pre-listing statement released on SENS                                                  Tuesday, 14 November
      Announcement relating to the issue of the Peregrine circular and finalisation
      information in respect of the unbundling released on SENS                                        Tuesday, 14 November
      Abridged pre-listing statement published in the press                                          Wednesday, 15 November
      Last day to trade in Peregrine shares in order to participate in the unbundling                  Tuesday, 28 November
      Trading in Peregrine shares ‘ex’ the entitlement to participate in the unbundling
      commences                                                                                      Wednesday, 29 November
      Listing date - Sandown Capital shares listed and commence trading on the JSE (at
      09:00)                                                                                         Wednesday, 29 November
      The ratio apportionment of expenditure and market value in respect of the
      unbundling released on SENS (by 11:00)                                                          Thursday, 30 November
      Unbundling record date (at close of trade)                                                         Friday, 1 December
      Sandown Capital shares credited to the accounts of Peregrine shareholders at their
      CSDP or broker (at 09:00)                                                                          Monday, 4 December

      Notes:
      1.    The above dates and times are South African dates and times.
      2.    Peregrine shares may not be dematerialised or rematerialised between Wednesday, 29 November 2017 and Friday, 
            1 December 2017, both days inclusive.

9.    Pre-listing statement

      The pre-listing statement is available in English only. Copies of this pre-listing statement are available on the
      company’s website at www.sandowncapital.com and may also be obtained from the offices of the company and
      the corporate advisor (6A Sandown Valley Crescent, Sandown, Sandton, 2196) during normal office hours from
      Tuesday, 14 November 2017 to Friday, 1 December 2017.

14 November 2017

Corporate advisor and sponsor                                         Legal advisors
Java Capital                                                          Werksmans

Independent reporting accountants and auditors and                    Independent reporting accountants
independent transaction sponsor                                       KPMG
Deloitte & Touche Sponsor                                             

Date: 14/11/2017 04:36:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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