Withdrawal of Old Mutual fund listing 'disappointing'

Posted On Thursday, 04 August 2011 02:00 Published by eProp Commercial Property News
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The withdrawal of the listing of the Old Mutual Triangle Fund is described as 'somewhat disappointing' by Angelique De Rauville, the portfolio manager at Investec Asset Management.

Angelique de Rauville

Almost a year on after announcing its intention to list the Triangle Real Estate Core Fund, Old Mutual Investment Group Property Investments (OMIGPI) has advised investors that it will no longer be proceeding with the proposed listing.

According to De Rauville, the SA listed property sector which currently accounts for approximately 2.82% of the JSE's market capitalisation weighted was due to benefit from a number of new listings during the course of 2012 including, but not limited to Old Mutual's Triangle Fund.

"The withdrawal of the Triangle listing is somewhat disappointing for the sector, which is still relatively small in terms of attracting broader investor attention, particularly international interest and as a function of lacking critical mass, says De Rauville.

OMIGPI have sighted changing market conditions and timing as key reasons behind the cancellation of the listing, opting rather to hold onto the assets in a bid to enhance shareholder returns.

"Having said this, the South African listed property sector is currently trading at a weighted average of 11.1% premium to net asset value implying some value could have been unlocked for existing investors into the Triangle Fund if the fund was to rerate to more or less where the sector is currently trading.

"Following a difficult start to the year the sector has had a particularly strong past six months returning 9.0% for investors. The Triangle Fund would have comprised one of a handful of new listings. Investec Property Limited deemed the market ideal for listing when they brought the Investec Property Fund to the market in April of this year," says De Rauville.

"The fund has enjoyed a considerable rerating since its launch having listed at R9.50 and with a current share price of R10.50. Rebosis was the second successful listing this year. Further, sector giant Growthpoint and other funds and companies including Fountainhead and NEPI have all deemed the current market appropriate for raising new equity.

"This trend is set to continue into the second half of 2011 with several other new listings and further equity raises expected," De Rauville adds.

She says OMIGPI's intended listing had been viewed positively by the market following the initial announcement. The potential exposure to some of the country's most prime retail assets had given investors new found confidence around the growth of property as an asset class and greater diversification opportunities.

"A portfolio comprising the likes of Gateway Theatre of Shopping, Menlyn Shopping Centre and Cavendish Square, would have been positive for the sector as a whole by converting a relatively illiquid investment for existing investors into a more tradable security and also by providing a much broader market with access to some top quality South African retail assets managed by Old Mutual. The inclusion of Triangle would have taken the sector's exposure to the country's prime regional retail assets to 19 of the top 27 and grown the size of the sector in assets to beyond R160.0 billion. Improved transparency is also a key benefit for investors into a listed entity," De Rauville says.

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