Bonatla CEO explains Sharemax listing

Bonatla CEO Niki Vontas says that if Sharemax wasn't in some kind of trouble, it would never have entertained a deal with a tiny company like Bonatla.

On Tuesday morning it was announced that Sharemax investors will get to decide whether they want to inject their property and loan assets into Bonatla. The proposed deal, if fully concluded, would give Sharemax investors control of Bonatla.

Recently, Sharemax's business model was declared illegal by the Reserve Bank. It has also received criticism for its method of subsidising investors' income, its valuations, and its optimistic forecasts.

Vontas admits that the deal will be a tough transaction that will require a lot of work. Bonatla has experience in troubled property deals, having already been involved in the failed Bluezone property syndication scheme.

One of the challenges will be to ensure that every Sharemax investor gets a fair deal. For example, owners of healthy buildings will be unwilling to subsidise those who own duds.

Vontas says he will investigate listing two types of shares, one for investors who own income-producing properties such as shopping centres, and another for those who own land, which has holding costs, and may require extra cash to develop.

Another challenge is the completion of The Villa, Sharemax's largest and most ambitious syndication to date. So far, investors have poured more than R1.6bn into The Villa. Vontas estimates that another R1.2bn will be required to complete the first phase of the project. 

Vontas says he's considering various funding options and is confident that Bonatla can raise the necessary cash. He notes that Bonatla might be a tiny company now (it has a market value of little more than R40m after selling its portfolio to Momentum), but it has concluded some big deals in the past.

By Realestateweb's count, there are 34 current Sharemax syndications, with a total amount of R4.5bn collected from investors (see table below). The Villa and Zambezi Retail Park together account for more than half of this value.

What happens if investors in only a few of the 34 syndications approve the listing into Bonatla? Will the whole deal be called off? Not at all, replies Vontas. He says Bonatla intends to house the properties of any investors who give their approval.

"If we went to Sharemax and said it's all or nothing, then we wouldn't really be serious about the transaction," says Vontas.

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