Vunani returns to property
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.