JSE: Dipula Income Fund Lists on the JSE
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Prior to listing Dipula raised nearly R1,4-billion through a successful private placement.
“The listing of Dipula has provided an opportunity for investors to participate in a unique high-yield income fund which offers an A and B unit structure, with excellent BEE credentials thanks to a black-owned asset manager which is equally owned by Mergence and Dijalo,” says Dipula CEO Izak Petersen.
“Dipula has come to market at a time when a solid investment proposition and underlying portfolio fundamentals are essential for listing success,” says Petersen. “The positive response to our private placement reflects strong market support which is noteworthy, especially considering the volatility of market conditions experienced over recent weeks,” notes Petersen.
Dipula A-linked units have an initial forward yield of 9.25% for the year ending 31 August 2012. The distribution on A–linked units will grow at 5% per annum for the first five years (until 31 August 2017) and thereafter they will grow at the lower of 5% per annum or CPI.
The Dipula B-linked units will offer a variable rate debenture with high anticipated growth. They will receive the residual distributable income after settlement of the A-linked unit distribution at an anticipated initial forward yield of 10.73% for the year ending 31 August 2012.
The company owns a diversified property portfolio, located throughout South Africa, with a retail bias to low income households, which are expected to outperform higher income households in terms of growth in the short- to medium-term. The Dipula portfolio consists of over 170 properties representing good sectoral and geographical diversification.
Dipula was established through the merger of Dipula Property Fund and Mergence Africa Property Fund. Dipula has exceptional BEE credentials, with a strong management team and board of directors. Mergence and Dipula Property Fund kingpins Petersen and Saul Gumede will be playing key roles in Dipula, providing favourable continuity of management.
Dipula’s Board of Directors comprises Chairman Zanele Matlala and CEO Izak Petersen with Saul Gumede, Brigitte de Bruyn, Brian Azizollahoff, Eltie Links and Younaid Waja.
Petersen stresses a highly acquisitive growth strategy for the company going forward. “We are in the market for stock and we welcome paper and cash transaction,” he says. Petersen notes that Dipula will only consider income-enhancing acquisitions.
“Dipula is able to offer above average growth in distributions by targeting dependable and sustainable growth through focus on income quality and tight cost management,” says Petersen. He points to low average rentals as providing scope for positive reversions.
Dipula intends to maintain a gearing level of around 40%, and is currently about 36% geared and therefore has scope for further gearing should the need arise. Petersen states that the majority of Dipula’s debt is fixed – currently around 80% – for between four and five years at a current all-in rate of some 8.58%.
Dipula’s financial year end is 31 August and it will be represented on the JSE under short names ‘DIA’ for the A-linked units and ‘DIB’ for the B-linked units.
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