Publications
Partners
The first reaction Finweek drew from a Western Cape-based property source to the proposed sale of upmarket wine estate Boschendal to Cinmark Twenty Seven for R700m was a cynical contention that the buyer was paying several hundred million rand too much.
Obviously, that’s a comment that must be taken with a pinch of salt – although looking back at historic transactions featuring Boschendal (which once belonged to Anglo American) there may be some merit in our source’s comment. And here we must look at information provided by the sellers of the iconic Franschhoek property: former mining house JCI, with a 62,7% stake, and listed property developer IFA Holdings, with a 37,3% stake.
If we go back to around 2009 – when IFA increased its stake in Boschendal to 37,3% – it’s instructive that the additional 5,25% it bought cost R9,6m. That transaction – if we presume the seller (Citation Holdings) wasn’t desperate – inferred a valuation of just R200m on Boschendal. When IFA made its first foray into Boschendal in mid-2006 it paid R54m for a 19,25% stake. At that point a value of more than R270m could be inferred for Boschendal.
The drop in value between 2006 and 2009 might easily be explained by the onset of the global financial crisis that started in late 2008. On the other hand, JCI valued its 35% stake in Boschendal at R127m at end-March 2007 – based on a third party offer to buy 20% of the company’s investment in Boschendal. So that inferred a value of almost R350m for Boschendal. But the JCI board had also indicated the long-term value of the Boschendal investment “could be in excess of the suggested R127m”. A circular sent out by JCI at year-end 2008 valued its 35% stake in Boschendal at R160m, inferring a value of closer to R470m.
If we go back further then it may even be significant to note that in 2004 Anglo American sold Boschendal to a consortium – headed by Citation Holdings and an empowerment partner – for R323m. We can move forward to early 2010 for the latest official pronouncement on Boschendal’s valuation. That was found in documents issued to JCI shareholders in May 2010, which placed a value of almost R400m on its 62,7% stake in Boschendal.
At that time the JCI board reckoned the almost R400m valuation for its Boschendal stake was “fair and reasonable”. If so, then Boschendal carried a value of around R650m in early 2010 – which is more or less in line with the latest bid.
While the proposed Boschendal sale means JCI can sort out its legacy debt and IFA – which has a market capitalisation of just R90m – can ease its gearing, the real intrigue is with the mystery buyer. Cinmark – which, as far as Finweek can ascertain, is based in the bustling metropolis of Grabouw – is headed by entrepreneur Arnold van Graan. Cinmark is tagged as a 100% black-owned entity, which means it will be the second time in a decade Boschendal has an empowerment company as a shareholder.
Cinmark not only has to find R700m for the buying price but also has to shoulder the burden of carrying Boschendal forward by completing the transformation of the property from a wine estate to a fully fledged leisure and retail development. Maybe a listing and a fund-raising exercise will follow?
Obviously, that’s a comment that must be taken with a pinch of salt – although looking back at historic transactions featuring Boschendal (which once belonged to Anglo American) there may be some merit in our source’s comment. And here we must look at information provided by the sellers of the iconic Franschhoek property: former mining house JCI, with a 62,7% stake, and listed property developer IFA Holdings, with a 37,3% stake.
If we go back to around 2009 – when IFA increased its stake in Boschendal to 37,3% – it’s instructive that the additional 5,25% it bought cost R9,6m. That transaction – if we presume the seller (Citation Holdings) wasn’t desperate – inferred a valuation of just R200m on Boschendal. When IFA made its first foray into Boschendal in mid-2006 it paid R54m for a 19,25% stake. At that point a value of more than R270m could be inferred for Boschendal.
The drop in value between 2006 and 2009 might easily be explained by the onset of the global financial crisis that started in late 2008. On the other hand, JCI valued its 35% stake in Boschendal at R127m at end-March 2007 – based on a third party offer to buy 20% of the company’s investment in Boschendal. So that inferred a value of almost R350m for Boschendal. But the JCI board had also indicated the long-term value of the Boschendal investment “could be in excess of the suggested R127m”. A circular sent out by JCI at year-end 2008 valued its 35% stake in Boschendal at R160m, inferring a value of closer to R470m.
If we go back further then it may even be significant to note that in 2004 Anglo American sold Boschendal to a consortium – headed by Citation Holdings and an empowerment partner – for R323m. We can move forward to early 2010 for the latest official pronouncement on Boschendal’s valuation. That was found in documents issued to JCI shareholders in May 2010, which placed a value of almost R400m on its 62,7% stake in Boschendal.
At that time the JCI board reckoned the almost R400m valuation for its Boschendal stake was “fair and reasonable”. If so, then Boschendal carried a value of around R650m in early 2010 – which is more or less in line with the latest bid.
While the proposed Boschendal sale means JCI can sort out its legacy debt and IFA – which has a market capitalisation of just R90m – can ease its gearing, the real intrigue is with the mystery buyer. Cinmark – which, as far as Finweek can ascertain, is based in the bustling metropolis of Grabouw – is headed by entrepreneur Arnold van Graan. Cinmark is tagged as a 100% black-owned entity, which means it will be the second time in a decade Boschendal has an empowerment company as a shareholder.
Cinmark not only has to find R700m for the buying price but also has to shoulder the burden of carrying Boschendal forward by completing the transformation of the property from a wine estate to a fully fledged leisure and retail development. Maybe a listing and a fund-raising exercise will follow?
