Texton finds partner to help power growth

TEXTON Property Fund seems set for the kind of portfolio growth its investors have craved since it was formed out of Vunani Property Investment Fund in February. Texton wants to grow its asset base from about R3bn to R6bnR8bn within the next three years. To do this it needed a partner with deep pockets, and on Friday it announced it had sold a 20% stake to a broadbased black economic empowerment (BEE) consortium led by Zava African Capital, for R443m.

PDNA Property Investments already owns 5% of Texton, so the deal takes its BEE ownership to 25%. The Zava consortium secured the funding for the deal from the Public Investment Corporation, a large owner of properties in SA.

CEO Rob Kane said the transaction would help Texton serve its government tenants and grow its portfolio. “Certainly, having such strong BEE partners gives us the capability to serve government tenants. But that’s not how we want to approach our business. We have become larger and are looking to serve strong tenants and in turn our shareholders. These are government and private tenants,” Kane said.

Texton achieved double-digit growth in income distribution payouts in the year to June. But the group’s capital return has been less forthcoming. Texton was trading at R9.65 a share on July 1 and closed at R9.65 on Monday.

The fund is primarily an office play and offices have performed worse than retail, residential and industrial properties this year.

CURATOR Tom Winterboer seems to be making steady progress in reviving African Bank, but the delay in the listing of the “good bank” raises questions such as whether the market is ready for the floating of the shares on the JSE. Although the curator and his team have worked hard in stabilising the bank, the listing — initially planned for February — was an ambitious target.

A listing of African Bank’s “good” assets will not be an easy process. Investors are still bearing scars from the crisis that hit African Bank Investments in August. Some have grown very sceptical of SA’s unsecured lending sector, especially African Bank.

The other issue is that only a few people know what form the “good” bank will take. No one knows yet whether it will have a transactional banking and secured lending offering. No smart investor would invest in something they do not know.

Added to that, the bank has not issued its results since it was bailed out, perhaps a sign that there are underlying issues in the finances that still need to be resolved. African Bank’s results were due in November, but were postponed to early next year. Potential investors will definitely want to see a track record before there is any talk of a listing. The curator and his team are going to have to come clean.

nDave Marrs edits Company Comment (marrsd@bdfm.co.za)

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