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New black empowerment fund open for business

Jun 08 2017 10:31
Lameez Omarjee

Johannesburg – New black empowerment property fund, Izandla Property, will turn its attention to various transformation objectives in the South African economy.

The property fund which is 65% black-owned, is supported by Investec Property and Investec Property Fund and was launched on Thursday.

Investec Property (IP) will provide the fund management with needed skills, expertise and knowledge to develop it into an independently functioning fund within the next five to 10 years. Investec Property Fund (IPF) will provide much needed capital.

This is according to Nick Riley, chief executive of IPF and Sthembile Nkabinde, board member of Izandla Property Fund, who spoke to Fin24 ahead of the launch.

“Property is one of the asset classes which is the most under represented from an inclusive point of view,” said Riley. This is mostly because capital is hard to access, this is where the IPF comes in. In turn, IP will transfer skills to the Izandla Property management, which is yet to be appointed.

“We are not only facilitating by being a capital provider but also through skills transfer, that is one of the most important aspects for us,” said Riley.

The goal is for Izandla to become a viable competitor in the sector. Izandla should become a benchmark for empowered property, said Nkabinde.

Nkabinde added that the model of support which has been developed around the fund promotes “full transformation”.  “It’s not just about giving equity and then walking away.”

Nkabinde said that the fund aims to create value for its majority shareholder, Entrepreneurship Development Trust (EDT). The EDT was established in 2003 and supports broad-based beneficiaries across various programmes. The Trust has impacted thousands of youth through educational and entrepreneurial initiatives.

The development of entrepreneurs was critical for the success of the economy, added Riley. He went on to speak of the inclusiveness of the fund’s wealth creation. The fund will promote broad-based participation and eventually equity would be allocated to management of the fund.

The fund will give clients access to quality real estate assets and provide future property clients with a B-BBEE partner.

The fund also provides opportunities for clients to improve their B-BBEE score. Tenants will be initially given a level two rating, and for every R100 spent on rental they get a benefit of R125. At level one the benefit increases to R135, explained Riley.

Low growth environment

Through times of volatility and adversity there are opportunities that arise, said Riley. In light of the low growth environment, Izandla could benefit from the expertise of IP in terms of how to price when opportunities arise in a bull or bear market, said Riley. Further the fund will have access to capital to take advantage of the opportunities in the market.

With IPF being capital partners, the “capital constraint” is not as intense for Izandla, added Nkabinde.  Further besides access to capital there are networks which the fund otherwise would not have had access to, she said. 

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