Mara merger to boost Delta Africa

19 Nov 2015

Delta Africa will become the largest pan-African property fund on the JSE, with more than R6.5bn worth of assets if its planned merger with Mara Diversified Property Holdings goes ahead.

Mara, which is owned by The Pivotal Fund, a JSE-listed developer, will inject a Kenyan retail and Nigerian office development into Delta Africa in a R1bn deal. The deal will give a much needed boost to Delta Africa, which has struggled in the past to land sizeable deals to grow its portfolio.

Pivotal had initially planned to list Mara Diversified Property Holdings separately on the JSE before deciding to opt for the merger with Delta Africa.

Delta Africa will retain its listings on the JSE and Stock Exchange of Mauritius, but will be renamed Mara Delta.

"This deal is massive for Delta Africa. It more or less doubles our size and exposes us to a new pipeline of properties.

"Delta Africa as Mara Delta will be uniquely positioned with economies of scale to consolidate a number of these opportunities on the continent," said Delta Africa CEO Bronwyn Corbett on Tuesday, 17 November.

Pivotal was listed in December last year as a fund that sprung out of property developer Abland.

Since then Abland has launched a development business on the continent called Abland Africa.

As part of the Mara Delta agreement, Abland Africa, Kenyan developer Carlisle Property Holdings and investment company Mara Group will be appointed as promoters to source investment and development opportunities across the continent for Mara Delta.

"The larger company will have an additional strong anchor shareholder in Pivotal, access to a considerable acquisition and development pipeline through Abland Africa and other promoters as well as the track record and expertise to draw on local knowledge and experience," Ms Corbett said.

In terms of the deal, Delta Africa acquires Mara's two assets, Buffalo Mall Naivasha, a Kenyan retail, commercial and entertainment centre development and Oando Wings, an office development in Nigeria.

The purchase consideration for the mall development was 6.7m and it would be settled through the issue of new Mara Delta ordinary shares at $1.70 a share. The purchase consideration for the office development was $66.78m, which would also be settled through the issue of shares. The two purchase considerations totalled $73.48m.

Pivotal would also commit about R300m in funding to facilitate future capital raises as and when they were needed.

Pivotal CEO Jackie van Niekerk will join Mara Delta's board as a non-executive director. She said that Pivotal was excited about the opportunity to work with Delta Africa as it had already established a presence on the continent.

"Mara Delta will be a total return fund with a good income-producing portfolio currently valued at $458m, alongside a solid development component," Ms van Niekerk said.

The development component was estimated at $500m to be rolled out over five to 10 years, she said.

Stanlib's head of listed property funds, Keillen Ndlovu, said the Delta Africa and Mara partnership appeared to be a strong move by both parties.

"It's a good deal. It has more critical mass as compared to funds doing something on their own and having small portfolios," he said.

Source: Business Day

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