Growthpoint launches ADR programme to attract US investors

SA’s largest listed property company and the largest real estate investment trust (REIT) in emerging markets‚ Growthpoint Properties‚ has launched an American depositary receipt (ADR) programme to attract US investors and increase liquidity.

The ADRs are being launched on the US over-the-counter (OTC) market through a sponsored programme with BNY Mellon‚ with each Growthpoint ADR representing two ordinary shares in the company.

“We aim to increase the percentage of foreign shareholding in Growthpoint to enhance the diversification of our shareholder base. The US market is constantly looking for investment opportunities so we want to make the investment in Growthpoint as accessible as possible‚” said Growthpoint executive director Estienne de Klerk.

“Additionally‚ certain existing shareholders requested that we establish an ADR programme. A benefit of the programme is that it is a relatively low-cost way to develop name recognition and attract more attention in US financial community. An important additional benefit is increasing liquidity in our shares‚” he said.

In the investment proposition was that US investors could now buy a dollar-denominated share in a South African-based diversified property company that distributed all its net rental income every half year‚ he said.

“As all income is distributed on a half-yearly basis‚ management seriously considers the capital allocation of new investments (either acquisitions or developments) and carefully evaluates whether a new investment is sufficiently yield-enhancing for Growthpoint. The management team has proven in the past that this gives investors a better return‚” De Klerk said.

Lauren de Klerk‚ vice-president of BNY Mellon’s Depositary Receipts business‚ said the international acceptance of the REIT structure had meant that two South African property opportunities had become available this month to US investors.

“We expect more to follow and will work closely with Growthpoint to enhance its profile and meet its objectives. Now 34 of the JSE top 40 have a DR programme‚” she said.

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