Multilisted property fund Delta Africa has inked a deal to merge with JSE-listed development-focused investment fund, the Pivotal Fund, to create “property powerhouse” Mara Delta Property Holdings.

In terms of the framework agreement entered into between the parties, Delta Africa would acquire Pivotal’s entire 45.5% shareholding in Buffalo Mall Naivasha – a Kenyan retail, commercial and entertainment centre development – for $6.7-million, settled through the issue of new Mara Delta ordinary shares to Pivotal at $1.70 a share.

Transfer was expected to take place in March.

In addition, Mara Delta would acquire Pivotal’s entire shareholding in SB Wings Development – a Mauritian company with a 37.1% shareholding in the Oando Wings office development in Lagos, Nigeria – for $66.78-million.

The transfer of the interest in SB Wings was due to take place on completion of the development, expected in September 2016, while the purchase consideration would also be settled through the issue of new Mara Delta Africa ordinary shares to Pivotal.

The framework agreement would see Delta Africa changing its name to Mara Delta Property Holdings, retaining its two primary listings on the JSE and the Stock Exchange of Mauritius.

The conclusion of the strategic framework agreement remained subject to the confirmation of due diligences and Delta Africa shareholder approval.

Once concluded, Pivotal would be a substantial shareholder, with board representation in Mara Delta.

“Mara Delta will be uniquely positioned with economies of scale to consolidate a number of opportunities on the continent,” commented Delta Africa CEO Bronwyn Corbett.

“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 record and expertise to draw on local knowledge and experience,” she said.

Pivotal CEO Jackie van Niekerk added that Mara Delta would be a total return fund, with a “good” income-producing portfolio currently valued at $458-million, alongside a solid development component.

“Our objective is to leverage the experience and knowledge of the current executive management team and complement these skills by introducing further depth and competencies to the board.

“We believe that an experienced management team and a strong, independent board together with credible in-country partners will support the growth of a solid portfolio in a diverse and dynamic operating environment. To this end, the internalisation of the asset manager will unlock synergies and alignment across the portfolio in the six current countries of operation,” she remarked.

The existing asset management agreement between Delta Africa and Freedom Asset Management would be terminated in favour of the internalisation of Delta Africa’s asset management function and associated management fee.

Pivotal would commit the dollar equivalent of R300-million to future capital raises, as and when required to facilitate the equity funding of future acquisitions.

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