Acucap stake in Sycom may be prelude to merger

Posted On Thursday, 06 March 2008 02:00 Published by Commercial Property News
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Listed property company Acucap Properties yesterday announced it had acquired a 17,5% interest in Sycom Property Fund for R787,6m

Acucap PropertiesThe company said this was the first step in the possible merger of the two funds. Subject to regulatory approval, Acucap had simultaneously acquired 50% of Sycom’s management company, Sycom Property Fund Managers, for R207m. “The intention is to merge the two funds when market conditions are suitable,” said Acucap MD Paul Theodosiou.

He said there had been a significant degree of consolidation in the listed property sector over recent years.

Theodosiou said most industry players acknowledged there were benefits for larger funds such as “improved diversification, lower concentration risk from individual large assets, the ability to leverage larger transactions, and improved liquidity in the share market”.

The combined property fund would have assets of close to R10bn. The 17,5% interest in Sycom was acquired from Attfund, while the 50% stake in the management company was acquired from Parkdev, which holds the other 50%.

However, Hyprop Investments, which has effective control of 39% of Sycom, will ultimately decide whether any merger would go ahead.

Hyprop owns about 36% of Sycom and its sister property company, Redefine Income Fund, owns 3%.

Theodosiou said if Hyprop no longer wanted to remain an investor in Sycom, there would be a “commercially sensible way for them to exit the fund”.

Hyprop MD Pieter Prinsloo said since Hyprop acquired its stake in Sycom last year its intention was always to “be an investor in Sycom because of the underlying good quality of assets”.

“Our intention is still the same,” said Prinsloo.

Madison Property Fund Managers executive director Marc Wainer said Madison and Hyprop had previously been in discussions with Attfund and Parkdev about a “possible deal” similar to the one announced by Acucap. Madison manages Hyprop and Redefine assets.

Wainer said Acucap’s stake in Sycom cost R22 a unit, which did not “represent value”.

He said Madison had also looked at acquiring the management company of Sycom, and “we couldn’t find value there at that price”.

Theodosiou said Acucap believed the Sycom transaction represented “fair value”.

“It will be more fully demonstrated when the financial effects are disclosed… once the vendor placement of units is complete.”

Acucap is paying for the interest in Sycom and its management company through the issue of a combination of units and cash.

Source: Business Day


Publisher: I-Net Bridge
Source: I-Net Bridge

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