Delta and Pivotal in strategic marriage

Mara Delta Property is born

DELTA Africa, the multi-listed property fund formerly known as Delta International, and JSE-listed Pivotal had formed a new strategic relationship to create a property powerhouse on the African continent.

The combined entity will be called Mara Delta Property Holdings and have assets under management valued at $458 million (R6.6 billion), with secured transactions expanding its footprint to Morocco, Mozambique, Mauritius, Zambia, Kenya and Nigeria.

Mara Delta Property Holdings will retain its two primary listings on the JSE and the Stock Exchange of Mauritius.

In terms of the framework agreement, Delta Africa will acquire Pivotal’s entire 45.5 percent shareholding in Buffalo Mall Naivasha, a Kenyan retail, commercial and entertainment centre development, for $6.7m with transfer expected to take place in March.

The purchase consideration will be settled through the issue of new Mara Delta ordinary shares to Pivotal at $1.70 a share.

New development

Mara Delta will also acquire Pivotal’s entire shareholding in SB Wings Development, a Mauritian company with a 37.1 percent shareholding in Oando Wings Development as its sole asset, for $66.78m. This will be settled through the issue of new Mara Delta Africa ordinary shares to Pivotal.

SB Wings Development is currently undertaking an office development in Lagos in Nigeria. The transfer of the interest in SB Wings Development is scheduled to take place on completion of the development, which is expected in September.

The framework agreement will also result in the termination of the existing asset management agreement between Delta Africa and Freedom Asset Management in favour of the internalisation of Delta Africa’s asset management function and associated management fee.

Pivotal will also commit R300m to future capital raises as and when required during the period up to September 30 to facilitate the equity funding of future acquisitions.

As part of the agreement, Abland Africa, Carlisle Property Holdings and Mara Group will be appointed as promoters to source investment and development opportunities for Mara Delta across the continent.

The conclusion of the strategic framework agreement is still subject to the confirmation of due diligences and Delta Africa shareholder approval. Once concluded, it will result in Pivotal becoming a substantial shareholder with board representation in Mara Delta.

Bronwyn Corbett, the chief executive of Delta Africa, said yesterday that Mara Delta would be uniquely positioned with economies of scale to consolidate a number of opportunities on the continent.

“The larger company will have an additional strong anchor shareholder in Pivotal, access to a considerable acquisition and development pipeline through Abland Africa and other promoters, as well as the track record and expertise to draw on local knowledge and experience,” she said.

The objective was to leverage the experience and knowledge of the current… team.

Jackie van Niekerk, the chief executive of Pivotal, said Mara Delta would be a total return fund with a good income producing portfolio currently valued at $458m alongside a solid development component.

Further depth

Van Niekerk said the objective was to leverage the experience and knowledge of the current executive management team and compliment these skills by introducing further depth and competencies to the board.

“We believe an experienced management team and a strong, independent board together with credible incountry partners will support the growth of a solid portfolio in a diverse and dynamic operating environment.

“To this end, the internalisation of the asset manager will unlock synergies and alignment across the portfolio in the six current countries of operation,” she said.

Delta Africa shares on the JSE yesterday rose 5 percent to R21, which valued the company at R1.5bn, while Pivotal shares lost 2.9 percent to R19.40, which valued the fund at R6.4bn.