Management company internalisation and renewal of cautionary announcement STELLAR CAPITAL PARTNERS LIMITED Incorporated in the Republic of South Africa (Registration number: 1998/015580/06) Share code: SCP ISIN: ZAE000198586 ("Stellar Capital" or "the Company") MANAGEMENT COMPANY INTERNALISATION AND RENEWAL OF CAUTIONARY ANNOUNCEMENT 1. INTRODUCTION Further to the cautionary announcement first released on the Stock Exchange News Service on 18 November 2020, and based on various interactions with stakeholders, shareholders are advised that the Stellar Capital board of directors ("Board") has concluded its evaluation of the Management Company structure and has resolved, subject to shareholder approval, to terminate the Management Company structure through the acquisition of all the issued shares in the Management Company from Foxglove Capital Resources Limited and K2016225267 (South Africa) Proprietary Limited (collectively, the "Manco shareholders")("Manco internalisation"). 2. BACKGROUND Stellar Capital has appointed Thunder Securitisations Proprietary Limited ("Manco"), since 2015, as its dedicated investment manager to manage the portfolio of the Company in accordance with Section 15 of the JSE Limited ("JSE") Listings Requirements. The Manco, in terms of its management agreement with the Company, acts on behalf of the Company in sourcing, negotiating, concluding and executing investment opportunities for the Company. The management agreement is perpetual but is subject to renewal at each Annual General Meeting in terms of an ordinary shareholder resolution. 3. OVERVIEW AND RATIONALE FOR THE MANCO INTERNALISATION The Board, after engaging with relevant stakeholders, recognises that, going forward, the Manco internalisation will better align the interests of management with those of Stellar Capital shareholders and is in line with current corporate best practices. Shareholders holding a majority of Stellar Capital ordinary shares have indicated their lack of support for a further management agreement renewal resolution at the next Annual General Meeting. The Board further recognises that the failure to terminate the relationship with Manco could be an impediment to Stellar Capital’s ability to pursue certain corporate strategies, which may be in conflict with the interests of an external Management Company. The current management agreement requires the issue of 50 000 000 Stellar Capital ordinary shares to the Manco on termination of the management agreement, as well as a full 3- month notice period once shareholders have voted to terminate the relationship through an ordinary resolution, presented annually to shareholders at the Annual General Meeting, which is next scheduled for November 2021. The Board believes that the internalisation of the Manco for the same economics (50 000 000 Stellar Capital ordinary shares) provides a more constructive and beneficial route than termination of the management agreement, as internalisation of the Manco retains the skills and continuity of the resources from the Manco, limiting disruption and retaining key knowledge. This internalisation will also allow the Board to accelerate strategic initiatives. It is envisaged that, after the implementation of the Manco internalisation, the management agreement between Manco (at the time a wholly owned subsidiary of the Company) and the Company will be amended or terminated as an intra-group contract, if deemed fit by the Board. Following the Manco internalisation, Stellar Capital will ensure that the Memorandum of Incorporation of Manco does not frustrate or relieve Stellar Capital in any manner from compliance with the JSE Listings Requirements. 4. TRANSACTION CONSIDERATION If the Manco internalisation is approved and implemented in accordance with the Manco sale and purchase agreement executed between the Company and Manco, the purchase consideration of 50 000 000 Stellar Capital ordinary shares currently held in treasury will accordingly be payable by the Company to the Manco shareholders, instead of the equivalent settlement payment payable to Manco on termination of the management agreement. 5. CONDITIONS PRECEDENT The Manco internalisation and Manco sale and purchase agreement remain subject to the fulfilment of the conditions precedent that the Manco internalisation be approved by the requisite majority of Stellar Capital shareholders, and that all regulatory approvals that are required, be obtained. 6. OTHER SIGNIFICANT TERMS OF THE MANCO SALE AGREEMENT The Manco internalisation, if implemented, will have retrospective effect from 1 January 2021. The Manco shareholders have warranted the financial position of the Manco, on the basis that the net asset value of the Manco as at 31 December 2020, excluding the shares in the Company of which the Manco is the current beneficial owner ("excluded assets") and after deduction of any taxes payable by the Manco pursuant to the Manco internalisation and the transfer of the excluded assets, will not be greater than a negative R2 100 000. 7. CATEGORISATION The Manco internalisation constitutes a category 2 related party transaction in terms of the JSE Listings Requirements and, accordingly, requires shareholder approval by way of an ordinary resolution. 8. RELATED PARTY TRANSACTION In terms of the JSE Listings Requirements, the Manco internalisation constitutes a related party transaction as Stellar Capital is transacting with its management company pursuant to the Manco sale and purchase agreement and Foxglove Capital Resources Limited, the current 50% shareholder of Manco, is also a material shareholder of Stellar Capital. A circular will be dispatched to Stellar Capital shareholders in due course to provide them with detailed information regarding the Manco internalisation (including consolidated pro forma financial information) and to convene a general meeting at which shareholders other than the Manco and Foxglove Capital Resources Limited will have the opportunity to consider and vote on the Manco internalisation. An independent board has been constituted by Stellar Capital to consider the Manco internalisation and to advise shareholders of its opinion in relation to the Manco internalisation. The independent board has, in turn, appointed an independent expert to provide it with external advice and to prepare a report, indicating whether the Manco internalisation is fair to Stellar Capital shareholders. A copy of this report will be included in the circular to shareholders. 9. RENEWAL OF CAUTIONARY ANNOUNCEMENT Shareholders are referred to the cautionary announcement first released on the Stock Exchange News Service on 18 November 2020 and renewed on 31 December 2020, where shareholders were advised that the Board is considering various proposals, in addition to the evaluation of the Management Company structure, in order to achieve the Company’s strategic objectives. Accordingly, shareholders are advised to continue to exercise caution when dealing in their Stellar Capital shares, until a further announcement is made or the cautionary announcement is withdrawn. Cape Town 5 February 2021 Sponsor RAND MERCHANT BANK (A division of FirstRand Bank Limited) Date: 05-02-2021 10:00:00 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.