Over the years, far too many businesses have raised money from investors on the promise of JSE listings that never happened. Not so Safari Investments which made its debut today, on cue to a promise made a decade ago to an initial 190 shareholders. That’s not all which makes this commercial property development business different. As you’ll hear in the Podcast (and read in the transcript) it pioneered investments into an area which others ignored (and banks red-lined). And although he’s 75, Safari’s founder and driving force Francois Marais has no intention of slipping away. He’s keen to keep running the show for some years to come  – witness two takeover offers that were turned down before today’s listing. At the closing 850s, the stock delivered a quick 100c a share profit for those who participated in the pre-listing private placement. There’s still a fair bit of upside left. – AH  Â
FRANCOIS MARAIS:  It’s quite funny, how it all started. We did some small centres over a number of years. We actually started the centre in ’95 and then, around 2001, I met a guy literally on our church steps – having then completed a development – and he asked me (he knew I was in the staffing business) and he asked me what we were going to do next. I said ‘no, we’re looking for something’ and that brought us to the Mamelodi development. He tried several other bigger firms, but couldn’t get it off the ground. We started then, and three years later in 2003, we actually opened Mamelodi – the first phase.
ALEC HOGG:Â A big risk at the time?
FRANCOIS MARAIS:  Sure, we couldn’t get financing from the banks. The banks were complete opposed to the idea of investing in a township and we could hardly persuade any of the major tenants to look at townships seriously, so the first venture (Mamelodi was the primary)…the first phase was fifteen thousand square metres. Today, it’s almost three times that. It took years of hard work and hard marketing to persuade the National Tenants – gradually – to be interested in townships, but it also talks to itself. The results spoke for itself. Results are a wonderful thing. It brings everybody to their attention, brings the market to their attention, and entrenches everything.
ALEC HOGG: Francois, we know that in business, it’s all about relationships, but who were the early guys who supported you? Which tenants came in first?
FRANCOIS MARAIS:  That’s very interesting. The first tenants were Shoprite and the Pepkor Group, then some lesser-known fashion houses. We had interest from two banks in the initial stages, from the furniture stores, and then some other odd tenants not worth talking about. Of course, there was KFC. KFC is always there. Today, we have a portfolio of around one-hundred-and-twenty-five thousand square metres. We’re currently busy with extension of another twenty-five and more after that, and in the portfolio, we hold 90 percent nationally. Today, we literally have all the fashion houses all around in the centres, and we also have Spar as attendants. In the new extensions, we’re also getting Pick & Pay, but largely, we have Shoprite, we have all the banks, and all the necessary furniture stores, so we have a very nice range of complementary attendance.
ALEC HOGG:Â While you were busy doing this (because you are from the Pretoria area) were there other property developers in other parts of South Africa, who were also investing in shopping centres in townships?
FRANCOIS MARAIS:  The one well-known developer is John McCormack and they’ve been developing in the rural areas, or you can refer to it as the previously disadvantaged areas. They have been very big developers in this market.
ALEC HOGG:Â Successful?
FRANCOIS MARAIS:  Oh yes, very successful, but not necessarily in the townships yet. I think, for some or other reason, everybody is a little bit shy of the townships and I think we got over the shyness. There’s a way of working there, by the way. You have to know the councillors. You have to meet them. You have to tell them what you’re going to do. You have to create the right channels so that you employ people correctly on the site when you’re working there, when you’re building. We also achieved above 80 percent local content in the stores afterwards, which is for the employment of people – very important – local content from the local township.
ALEC HOGG: Talking about the councillors, Mark Weiner from Redefine said he had a huge problem in Hammanskraal and that’s why he pulled out of there. He said he’d never do any of those businesses again. Have you found difficulties in councillors wanting perhaps more remuneration than just what the council pays them?
FRANCOIS MARAIS:  You will always have that. You’ll always have that sort of temptation, but you stay away from it because you don’t want to know those councillors. We haven’t had the need for that, but I must say that it takes between five and six years to obtain property there. The initial property we got in the town centre…there was no development. Everybody was excited about the new venture. Then, it was easy, but today it has become very difficult. People are selfish. It’s funny how councillors can actually be short-sighted, and selfish.
ALEC HOGG:Â I guess, if you were prepared to grease palms, you could expedite that.
FRANCOIS MARAIS:  You could. We have some other people who are using normal influences to achieve the same thing we want. In this way, we’re very excited about the fact that we have the PIC and Women’s Development Plan as our new partners/shareholders because as you know, a shareholder is always a partner. I think we’ll be able to use some of their influence as well, but we have a rather entrenched guy who sits in Parliament. He’s a very straight and honest person, and does a lot of this work for us.
ALEC HOGG: Francois, from your perspective…  How old are you now?
FRANCOIS MARAIS:  Old enough. I’m 75…coming onto 75…
ALEC HOGG: Well, Warren Buffett’s 83, so I’m not saying you need to retire any time soon, but do you have the intention of working until your very last day?
FRANCOIS MARAIS:  I think I’ll use the next four or five years to slowly hand it over to the youngsters. This is my intention, just to make sure that the company’s going to stay where it is, hopefully improve, and to slowly grade it down to the younger people there, who have lots of energy. I do however, have a lot of energy and I’m healthy fortunately, so I’ll keep going for four or five years at least – maybe longer.
ALEC HOGG: As people get older, they tend to become more risk-averse. Are you finding that with yourself, or are you just as excited today as when you took that pioneering step into Mamelodi?
FRANCOIS MARAIS:  My partners say I’m the riskiest guy they know. No, I’m never afraid of risks. If you don’t want to take risks in our game, you shouldn’t be in the game. Your risks are, however, calculated and you do a lot more calculation nowadays than you did in the past, but we don’t really take risks to the shareholders. We take the risk in the development company. Incidentally, we have two companies: the investment company – Safari Investments, and the development company – Safari Developments. We keep the risk in that company and we take it out of the investment company, so if a product comes into the investment company, it’s there, it’s made, it’s left, and everything is in place.
ALEC HOGG: About R375m: what’s important about that number?
FRANCOIS MARAIS:  We promised shareholders a yield of nine percent, so we had to stop at nine percent. When you say ‘stop at nine percent’ you obviously, have a limitation on the number of shares you can issue and that, essentially, tied it. We said that we would be happy with R320m – that was around 164-million shares – but we were able to go up to 170-million with our reserves. We could therefore go to that, and still maintain the nine percent.
ALEC HOGG: Your focus has been in townships. Now you’re looking to do something spectacular in Swakopmund.
FRANCOIS MARAIS:  Yes, we’re not really tied to townships that much. The township market is a very lucrative market – make no mistake – from a letting point of view and from the way you acquire property. That market is still, by comparison, cheap, so it’s a good investment but we’ve never been partial to townships only. Certainly, the venture in Swakopmund is very exciting. It’s a waterfront. We have the property. We’re currently busy with the earthworks and the waterworks. The waterworks is another thing altogether. You get to know the west coast sea very well.
ALEC HOGG: And thereafter…
FRANCOIS MARAIS:  We have another venture in…again; you can call it a lesser-known market. We’re looking at a venture in Bushbuckridge, which is a market all on its own with many millions of people living there, and we’re also looking at investment two years from now, in Rustenburg, which could be exciting. It could mean an entirely new town, so to speak. We’re looking at a commercial development of around three to four-hundred-thousand square metres of developed property.
ALEC HOGG: So, lots of excitement around the corner. When one looks at Safari – the company you listed today – in the property sector, there’s a lot of consolidation and quite a lot of takeovers. How are you secure from that before you manage to actually fulfil all your dreams?
FRANCOIS MARAIS:  We are very much on our own. We don’t share anything with anybody else. Our company owns what it owns and we have no outside partners other than our shareholders, so we are focusing on our own thing. We can obviously look at acquisition, which we certainly will do, but I think we can grow fast enough. We hope to grow to R2bn – maybe R2.5bn – in the next two years, and thereafter to R3bn/R3.5bn in the next three or four years. Once we’ve reached those levels, we’ll be quite comfortable. If somebody approaches us, we’ll always look at it. We’ve had two approaches. I didn’t want to talk about it.
ALEC HOGG: You’ve had two approaches already.
FRANCOIS MARAIS: Â Yes.
ALEC HOGG:Â Before you listed?
FRANCOIS MARAIS:  That’s’ right, yes, but none of them were particularly attractive. There are funny portfolios in the market. We have, I think, a clean portfolio, a portfolio of good quality, and we want to maintain it as such, particularly for our shareholders. We respect their wishes very, very highly.
