Industrial conglomerate group Barloworld Limited on Wednesday launched its public offer for Khula Sizwe Property Holdings, a black-owned property company, in a bid to enable black South Africans to own a stake in a significant property company.
Through this transaction, which is part of the company's vision for social and economic development, Barloworld will sell a portfolio of its properties to Khula Sizwe and lease back the properties for a ten-year period.
The black public, and approximately 14 000 of Barloworld's management and employees, will own shares in Khula Sizwe, with blue-chip Barloworld as the tenant.
Khula Sizwe will be providing the opportunity for black South Africans to own their share of a commercial property portfolio valued at R2.86-billion. Barloworld said the total value of the transaction was R3.5-billion.
The other component of the B-BBEE transaction is the Barloworld Empowerment Foundation Trust, which has a direct three percent stake in Barloworld Limited and is focused on poverty alleviation and youth development.
Investors have from Wednesday until May 31, 2019 to apply for their portion of the 16.34 million-shares available for purchase by black South Africans.
The public offer is aimed to raise R163.4-million to fund a portion of the property acquisition for 30% ownership. Barloworld said it was contributing R174.2-million for 32% Employee Trust while the balance would be funded through an external loan.
Tantaswa Fubu, Barloworld spokesperson and executive for human capital, said the offer to give black South Africans the opportunity to participate in a property-based B-BBEE share scheme that is not related to a share price was a first of its kind in this country.
"Through Khula Sizwe, shareholders have the opportunity to invest in a property company with less volatility than a share-based scheme," Fubu said.
"The company has guaranteed rental income from Barloworld as Khula Sizwe's tenant, making their investment more stable with predictable cashflows, and reducing risk whilst creating value for shareholders."
Fubu said Barloworld’s B-BBEE transaction provides the company with the unique opportunity of aligning the objective and prospects of its employees and shareholders.