Redefine Income Fund (RDF) on Thursday announced that it has reached agreement with black-owned Mergence Africa Holdings to establish a black economic empowerment (BEE) property fund, Mergence Africa Property Fund (Proprietary) Limited which will make a major contribution to elevating enterprise and skills development in the property industry.

Mergence Africa Property Fund will have an initial property portfolio valued at some R230 million and will be owned by Redefine (49%) and Mergence (51%) with the asset management of the company provided by The Mergence Africa Property Fund Management Trust, an equal joint venture by a BEE consortium led by Mergence and JSE-listed property asset manager Madison Property Fund Managers Limited, which undertakes the asset management for Redefine.

"Together we intend to increase the Mergence Africa Property Fund property portfolio both in size and value in accordance with sound investment principles with a view to ultimately listing the company on the JSE Limited," says Redefine CEO Brian Azizollahoff. 

Mergence Africa Property Fund is already in the process of negotiating for the acquisition of additional property portfolios. "The strength of Redefine's size and leading position as the fourth largest South African property company listed on the JSE Limited together with Mergence's foundation and empowerment credentials positions Mergence Africa Property Fund ideally for future acquisitions and growth," says Mergence Africa Holdings Executive Director Izak Petersen.

This transaction is part of Redefine's overall BEE strategy and transformation initiative and is driven by Redefine's desire to contribute to enterprise and skills development in line with the Codes of Good Practice on Broad-Based Black Economic Empowerment published by the Department of Trade and Industry and the Property Sector Transformation Charter.

Mergence Africa Property Fund furthers Redefine's enterprise development initiative programme, which was launched in 2006 with the successful creation of Dipula Property Fund (Pty) Ltd, a joint venture between black-owned by Dijalo Property Services (51%) and Redefine (49%).

"These initiatives will ensure the continued success of Redefine as a company functioning within South Africa. Furthermore enterprise development ventures, through the creation of new businesses and the unlocking of opportunities, contribute more significantly to BEE than simply making equity available without any value being added by the new shareholders," points out Azizollahoff.

Azizollahoff describes Redefine's involvement in Mergence Africa Property Fund as true BEE with a black-owned business that can add real value from the inception of this sound commercial venture.

In addition to real estate, Mergence Africa Holdings is involved in asset management, providing an alternative investment boutique with approximately R3 billion in assets under management. It is also involved in advisory services, derivative structuring and execution and is owned and operated by its founders who are predominantly black. In recognition of the fact that the establishment of the fund comprises a BEE initiative, Mergence has undertaken that it will retain its BEE status and credentials for a period of at least seven years.

The purchase price of the initial property portfolio will be funded partially by way of third party senior debt financing in addition to equity provided Redefine and Mergence in ownership ratio.

The Mergence Africa Property Fund board will initially comprise Izak Petersen, Masimo-a-Badimo Magerman, Luis Levy, Peter Penny, Brian Azizollahoff and Grant Abrahams.

I-Net Bridge