| Tue 6 Jun 2006, 17:21 | | Madison - Abridged pre-listing statement |
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Madison - Abridged pre-listing statement
MADISON PROPERTY FUND MANAGERS HOLDINGS LIMITED
(formerly Madison Property Fund Managers (Pty) Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2003/021772/06)
JSE code: MDN & ISIN: ZAE000080560
("Madison" or "the company")
MADISON PROPERTY FUND MANAGERS LIMITED
(formerly Grassley Investments (Pty) Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2005/021874/06)
("Opco")
ABRIDGED PRE-LISTING STATEMENT LISTING OF MADISON LINKED UNITS ON THE JSE
LIMITED ("JSE")
This abridged pre-listing statement is not an invitation to the public to
subscribe for Madison linked units, but is issued in compliance with the
Listings Requirements of the JSE for information purposes only. The information
in this abridged pre-listing statement has been extracted from a prospectus
issued by Madison and Opco on 23 May 2006 ("the prospectus").
1. MADISON
Madison is one of the largest property asset managers in South Africa,
managing listed property funds with a combined market capitalisation in
excess of R16 billion and a combined enterprise value (being market
capitalisation plus debt) in excess of R20 billion at the last practicable
date (being Wednesday, 17 May 2006). Based on the "Listed Property Sector -
Annual Review" issued by Catalyst Fund Managers (Pty) Limited, the three
listed property funds managed by Madison (being ApexHi Properties Limited
("ApexHi"), Hyprop Investments Limited ("Hyprop") and Redefine Income Fund
Limited ("Redefine")) were all in the top four performers for individual
share performance in the listed property sector for 2005:
- Redefine was the top performer with a total return of 91%;
- ApexHi (B units) was ranked third with a total return of 65%; and
- Hyprop was the fourth best performer with a total return of 63%.
Madison will be the first listing of a property asset management company in
South Africa.
Each Madison linked unit being offered comprises a share in Madison
indivisibly linked to an unsecured variable rate debenture in Opco, a
wholly-owned subsidiary of Madison. Similarly with listed property loan
stock companies, unitholders invest in Madison linked units and receive two
income distributions a year in the form of interest payments on variable
rate debentures.
Based on the forecast income statement for the 12 months ended 30 April
2007 contained in the prospectus, the initial rate of interest payable on
the variable rate debenture is (as a percentage of the issue price of the
Madison linked units) anticipated to be marginally over 10%.
2. GENERAL HISTORY OF THE COMPANY
Marc Wainer and Wolf Eli Cesman, two of the leading figures in the South
African property sector, started the Madison business in 2000, initially as
the property division of a listed financial services company.
The business created and listed two of the most innovative and successful
property funds in South Africa:
- Redefine, listed in 2000, was the first listed South African hybrid
fund, investing not only in fixed properties but also in other listed
funds. Redefine has grown from a market capitalisation of
approximately R441 million on listing to in excess of R3 billion at
the last practicable date. Over the same period, the enterprise value
of Redefine has increased from approximately R900 million to
approximately R5 billion and the total return to investors has been
312% (in excess of 32% per annum compound return since listing);
- ApexHi, a high yielding income fund listed in 2001, was the first
South African fund to have an A and B linked unit structure, with the
A units being safe, predictable and relatively high yielding and the B
units carrying more risk but having the prospect of greater growth in
income distributions. ApexHi"s enterprise value has grown from
approximately R300 million on listing to in excess of R9 billion at
the last practicable date. The total return to A unitholders has been
225% (equivalent to 30.52% per annum compound return since listing)
and 440% to B unitholders (equivalent to 47.52% per annum compound
return since listing).
In 2000, the Madison business acquired a stake in Hyprop"s management
company ("Hyprop-Manco"). At the time Hyprop had an enterprise value of
approximately R340 million and its only significant asset was the Hyde Park
Shopping Centre. The business played a key role in the acquisition by
Hyprop of the Mall of Rosebank, the Glen Shopping Centre, Canal Walk
Shopping Centre and a significant stake in SA Retail Properties Limited.
Hyprop has grown from an enterprise value of approximately R340 million
(when the stake in Hyprop-Manco was acquired) to approximately R6.4 billion
at the last practicable date. The total return to investors over the same
period has been in excess of 478% (equivalent to 43.78% per annum compound
return).
In 2003, Madison acquired the business as part of a management buy-out and
immediately prior to the listing the business will be transferred from
Madison to Opco.
3. THE BUSINESS
Madison through Opco conducts an asset management business in property.
From the listing date (7 June 2006), the business shall consist of the
management agreements for ApexHi, Redefine, Hyprop, the Canal Walk Shopping
Centre and the Glen Shopping Centre.
Based on the profit forecast in the prospectus, Opco will earn just over
84% of its revenue in the form of asset management fees from ApexHi, Hyprop
and Redefine (collectively "the Madison Funds"), the bulk of which are
calculated as a percentage of the enterprise value of the Madison Funds.
The fees are payable in return for the provision of asset management
services and related services to the Madison Funds.
The management agreements with the Madison Funds cannot be terminated
(other than in specified circumstances set out in the prospectus) before:
- 31 December 2009, in the case of Hyprop;
- 31 August 2010, in the case of Redefine; and
- 31 December 2012, in the case of ApexHi.
In addition to its management fees, the group is forecast to earn
approximately 16% of its revenue from other sources including:
- consulting fees for advising external clients on property related
matters;
- deal specific transaction fees from the Madison Funds where the role
played by Opco in the context of a transaction goes beyond its normal
asset management role; and
- trading income, where it sees opportunities to trade in property
securities.
No asset movement fees are charged under any of the management agreements.
4. DIRECTORS
The board of directors of each of Madison and Opco are:
Director Age Role and Qualification Business address
term of
office
Marc Wainer 57 Executive - 2 Arnold Road
director Rosebank
(5 years) Johannesburg
2196
Wolf Eli Cesman 64 Executive BCom 2 Arnold Road
director CA(SA) Rosebank
(5 years) HDipTax Johannesburg
2196
Bernard Nackan 61 Non- BAEcon 28 Chilton Avenue,
executive (WITS), SEP Glenhazel,
director (Stanford - 2192
(indefinite) USA)
Monica Kebareng 41 Non- B.Juris 39 Empire Road,
Khumalo executive LLB Parktown West,
director 2193
(indefinite)
Harishkumar 56 Non- BSc 6 Cedarfield
Kantilal Mehta executive MBA Close, Springfield
director Park, Durban
(indefinite)
5. SHARE CAPITAL AND DEBENTURES
As at the date of listing:
- the authorised share capital of Madison shall be 800 000 000 ordinary
shares of 0.000125 cent each of which 190 000 000 ordinary shares will
be issued; and
- there will be 190 000 000 issued debentures in Opco of R4,99 each.
6. LISTING ON THE JSE
The JSE has granted Madison approval for the listing of 190 000 000 linked
units in the Financial Real Estate - "Real Estate Holdings and Development
Sub-Sector" of the JSE lists under the abbreviated name "Madison" JSE Code
"MDN" and "ISIN ZAE000080560".
The listing will be effective as from the commencement of trade on the JSE
on 7 June 2006.
Johannesburg
6 June 2006
Corporate advisor, legal advisor and sponsor
Java Capital (Proprietary) Limited
Attorneys to the Prospectus
Fluxmans Attorneys
Auditors and reporting accountants
PKF (Jhb) Inc. and PKF Corporate Finance (Pty) Limited
Date: 06/06/2006 05:21:11 PM Produced by the JSE SENS Department
