Boardroom Talk: AltVest’s Umganu – Perhaps one day all new listings will be done this way

There's always a brighter side, even in the darkest, despairing pit. Sometimes you've just have to look harder. With the carnage we're seeing in stock and crypto markets, this is 'sometimes'..First, an entire generation is learning the hard way (don't we all?) that investing is NOT easy. Many will be scared off. But enough of them are sure to absorb lessons on fear and greed that will stand them in good stead for the rest of their lives. .Second, even battle-scarred investment veterans are being reminded that only the supernatural enjoy a lock on market timing. When next we hear investing is a long-term game, it will be easier to remember this is so. Good returns only accrue to those who keep their heads during turbulence – which, like change, is a constant in equity investing..___STEADY_PAYWALL___.For our BizNews tribe, a less obvious benefit has been some practical lessons in the value of diversification. Yesterday's slow and boring has suddenly become today's spectacularly successful. Consider those 12J investment opportunities that closed off a year ago. Everyone who participated then will be doubly congratulating themselves now..Ditto, those who acted on the opportunity to follow the South African entrepreneurs into US medical properties. After the stock market meltdown, Orbvest's three musketeers Martin Freeman, Hennie Bezuidenhout and Justin Clarke, will be enjoying lots of love being sent their way by grateful fans..Alternative investments have a way of delivering at just the right time..So when invited to have a look at one, I usually do. It happened again yesterday when Warren Wheatley, whose creative mind devised the highly innovative AltVest, spent an hour sharing key data behind the Cape Town Stock Exchange fund's first underlying listing, the Umganu Private Lodge..A disclaimer and some important background. Warren, together with business partner Tshepo Mahloele, is the only outside shareholder in BizNews's holding company, Aurelius Media. He's rare bird – a CA with a strong creative gene – is also an active member of the BizNews community, and full of mostly excellent ideas for me on how we can do better..Our discussion yesterday was the kind you'd expect between two business associates..Warren shared the next that Umganu will list on the CTSE within the next month. It's a prize asset, a five-bedroom private lodge within the Legacy Group-developed upmarket 716-acre Elephant Point wildlife reserve. Umganu has the kind of sensational game-views you'd expect from a site overlooking the Sabie River adjacent to the Kruger National Park..Two other things add to its appeal. First, AltVest bought its half of Umganu from Kevin Pietersen, the South African athlete who achieved global fame playing for and captaining England's cricket team. Pietersen, who is keeping the other 50%, has a massive social media presence which will continue to be to market the Lodge locally and internationally..Second, through Pietersen's personal relationships Umganu guests can play nearby Leopard Creek, one of South Africa's most famous but also most exclusive golf clubs. For golfers worldwide, that's like enjoying access to a 'bucket list' course – the African equivalent of Augusta National, home of The Masters..The numbers Warren shared are instructive. AltVest is selling 43% of Umganu's equity to private investors ahead of its shares being listed (at R1.50 each) on the CTSE. The physical Lodge has an independent valuation of R30m and Pietersen's marketing company is at R5m. Umganu's shares are capitalised ahead of listing at slightly under R35m..From an investor's perspective, the Lodge is projected to make a small annual profit to be distributed as a dividend. The appeal for investors, however, is the projected capital appreciation of the asset just like any other property investment. AltVest is officially projecting capital growth of 10% per annum, conservative it says as this is just under half of what the developers anticipate..Here comes the interesting part for the BizNews tribe..AltVest is looking to retain 7% of Umganu. Wheatley says there is a lot of retail investor interest so a slice of the other 43% (R15m) will be kept to meet post-listing demand from those wanting to buy small parcels in the market. To defray risk, however, the bulk of the R15m is being privately placed with a minimum investment of R500 000..There's an attractive add-on benefits similar to those offered to the BizNews community by the vendors in last year's 12J investments. Wheatley says shareholders who invest R1m or more (max R2.5m) in the Umganu private placing will also receive a free weekend at the Lodge for the next three years (worth R300 000)..Wheatley says should members of the BizNews core community want to consider participating in the private placing, to meet regulatory compliance I'll have to personally introduce them. Hence this personal note. So, if the cap fits you, drop me an email (alec@biznews.com) and contact will be made..Interesting? For sure. Disruptive? Definitely. Wheatley and his AltVest partners say they want to 'democratise' private equity investment, previously the preserve of the ultra-rich and their helpers. He has a listing a month planned for the rest of the year. Who knows, maybe one day all new listings will be handled this way?.NB FOR YOUR WALL STREET JOURNAL ACCESS….As a Premium subscriber you are entitled to full membership of wsj.com (normal price $29 a month). Be sure to action your access through the Premium link on the BizNews website. Because of The Wall Street Journal's credential requirements, be sure to create a password which has at least 8 characters and includes at least one letter and one number – NB it MAY NOT contain any special characters (ie #, !, @ etc). To maintain access to WSJ.com, you MUST enter our partner's website via Biznews Premium at least once a month. A final PS, if you had previously signed up for WSJ you'll need to clear the cookies from your device. Our helpdesk can assist – support@biznews.com

Boardroom Talk: AltVest’s Umganu – Perhaps one day all new listings will be done this way

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