Vu­nani re­turns to prop­erty

Business Day - - FRONT PAGE - Londiwe Buthelezi

Fi­nan­cial ser­vices group Vu­nani is re-en­ter­ing prop­erty in­vest­ment in or­der to fur­ther di­ver­sify its port­fo­lio. The com­pany has won a ten­der to de­velop a mixed-use prop­erty in Clifton, Cape Town, and is ex­pect­ing to an­nounce an­other prop­erty trans­ac­tion soon.

Fi­nan­cial ser­vices group Vu­nani is re-en­ter­ing prop­erty in­vest­ment in or­der to fur­ther di­ver­sify its port­fo­lio. The com­pany has won a ten­der to de­velop a mixed-use prop­erty in Clifton, Cape Town, and is ex­pect­ing to an­nounce an­other prop­erty trans­ac­tion soon.

The group has had a prop­erty port­fo­lio be­fore, but sold it to Tex­ton Prop­erty Fund in 2013 to deal with its ris­ing debt.

“Some of the guys that were in our prop­erty port­fo­lio be­fore we sold it are back with us now. We are ag­gres­sively look­ing,” said CEO Ethan Dube.

The black-owned fi­nan­cial ser­vices group — with op­er­a­tions in as­set man­age­ment and ad­min­is­tra­tion, in­vest­ment bank­ing, stock broking, prop­erty and min­ing — in­creased rev­enue from op­er­a­tions by 46% to R233.7m in the six months to Au­gust. About 42% of the group’s earn­ings now come from pri­vate eq­uity ven­tures af­ter a 167% rev­enue growth in its min­ing op­er­a­tions.

“The min­ing sec­tor is per­form­ing very well right now. But it’s only a balance sheet strat­egy for us. With­out a strong balance sheet we can’t build our fi­nance busi­ness to the scale we want to. So the pri­vate eq­uity gen­er­ates the cash to do more ac­qui­si­tions in the fi­nan­cial port­fo­lio.”

Ba­sic earn­ings a share surged 85% to 15.7c.

Dube said the group is bullish that it would con­tinue with its up­ward tra­jec­tory for the rest of the year, de­spite dif­fi­cult mar­ket con­di­tions. “It’s partly a func­tion of the rel­a­tively high coal prices. But our other pri­vate eq­uity in­vest­ments are also do­ing well. We re­ceived div­i­dends of R8.3m this year com­pared to R0.8m last year.”

Al­though fi­nan­cial ser­vices re­main the big­gest part of Vu­nani’s op­er­a­tions, the min­ing port­fo­lio gen­er­ated R93.8m in rev­enue and con­trib­uted the big­gest share of the group’s profit at R13.7m. Vu­nani has a joint ven­ture with An­glo in which it pro­cesses coal mine dumps. It has en­tered into a big­ger joint ven­ture with An­glo and will start min­ing in Novem­ber.

Dube said in the longer term the as­set man­age­ment and ad­min­is­tra­tion busi­ness would be­come much big­ger than the rest. The unit’s prof­its are sup­pressed by ser­vic­ing costs at the mo­ment but that is ex­pected to change in the next two years, he said. In its as­set ad­min­is­tra­tion unit, Vu­nani added three prod­ucts on its plat­form.

Pre­vi­ously it has ad­min­is­tered ben­e­fi­ciary fund as­sets only, now stand­ing at R6.5bn. In the as­set man­age­ment space, it is look­ing to serve pri­vate and wealth-man­age­ment clients.

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