Barloworld’s Khula Sizwe public BEE offer oversubscribed

Barloworld media release

Barloworld Limited (“Barloworld”) today announced the closing of the Khula Sizwe Property Holdings (“Khula Sizwe”) public offer application period. The offer, which aimed to attract investors from the black public was oversubscribed, with over 50,000 applications received. The R164m funding target has been raised.

The public offer closed on 31 May 2019 with many still eager to participate post the closing time of 16h00.

Khula Sizwe is a new and empowered property company, established for the purpose of acquiring and leasing properties as a property holding and management company, to be owned by eligible Barloworld employees, management and the black public.

As Barloworld has a number of properties that it uses for its operations, the majority of these properties will be sold to Khula Sizwe. Barloworld will continue operating its business from these properties, providing Khula Sizwe with guaranteed rental income and predictable cash flows for at least ten years. In addition, Khula Sizwe is entitled to manage more properties outside of Barloworld, with the vision of being a large black-owned property company.

Commenting on Khula Sizwe, Barloworld spokesperson and Group Executive for Human Capital, Internal Audit and Transformation, Tantaswa Fubu said:

“Barloworld’s Khula Sizwe public offer has been a huge success and I am very pleased to say that it has surpassed all our expectations. We thank South Africans for their overwhelming support and eagerness to participate.

Our vision for this transaction was to create a truly unique, property-based B-BBEE share scheme that is not related to the Barloworld share price, and which will be a long-term investment for shareholders that provides steady and predictable cash flows over ten years. We encourage all our shareholders to hold their shares beyond the five-year minimum lock-in period to truly benefit from owning shares in a property portfolio, backed by an A-grade listed tenant, and the steady growth which this investment will realise over time.”

Applicants will be notified of the number of shares allocated to them and refunds for those shares applied for but not allocated will be processed by 31 August 2019. Due to the oversubscription, not all applicants will receive the number of shares for which they applied. Shares will be allocated as per the guidelines set out in the Khula Sizwe prospectus.

Important Dates for the Public Offer
Khula Sizwe Shares allocated by no later than Wednesday 31 July 2019
Sending Khula Sizwe Share confirmations and processing of refunds by no later than Friday 30 August 2019

The B-BBEE transaction provides Barloworld with the unique opportunity of aligning the objectives and prospects of our employees and shareholders with that of leaving a lasting legacy of contributing to poverty alleviation, education, youth development and advocacy through the Barloworld Foundation Trust.

Snapshot of Khula Sizwe:

  • Transaction value of R3.5bn
  • 15-year empowerment period
  • 5-year lock-in period (the earliest opportunity for any applicant to be able to sell their Khula Sizwe shares)
  • Acquisition of certain Barloworld properties by Khula Sizwe
  • Property being sold to Khula Sizwe at a 5% discount
  • Public offer to raise R163.4m to fund a portion of the property acquisition for 30% ownership
  • Management 38% stake to be funded through an interest free loan of R199m from Barloworld and R8m in own equity
  • Barloworld contributing R174.2m for 32% Employee Trust
  • Balance to be funded through an external loan

Information related to the transaction can be viewed here.

The Barloworld BEE Transaction also includes the Barloworld Empowerment Foundation Trust which will own 3% of Barloworld Limited.