This interview with AltVest chairman Koshiek Karan and director Warren Wheatley exposes a great deal about the disruptive newcomer with a mission to democratise private equity investment in South Africa. The duo celebrated AltVest’s Cape Town Stock Exchange debut last week with the news that its first listing will be done and dusted by the end of May; five more are tabled at one a month until the end of the year. Reflecting on a hectic schedule, which has taken AltVest from an idea to R50m listing in 18 months – and having to work through 2,000 potential partner companies – they shared their lofty ambitions with BizNews editor Alec Hogg.
Warren Wheatley on A-trade being listed on the Cape Town Stock Exchange
It was a beautiful day. But like all launches, there were glitches, particularly with the brokerage. There is a saying that if you aren’t embarrassed or you don’t have glitches on your first launch, you have waited too long. So, outside of that, it was a wonderful day. Very emotional, overwhelming, positive response from all our stakeholders, shareholders. The media response was phenomenal, unexpected and very overwhelming.
Koshiek Karan on listing AltVest within 18 months
The work starts now. Listing a company is one thing, going and executing and delivering on these opportunities is the second thing. The market is going to remember us for being able to list a company in 18 months. I’ve got to give heavy and full credit to Warren for getting over the line, taking that idea from what was written on a napkin to a listed company. History is going to remember us and our ability to take an innovate, disruptive, never-done-before platform and executing it. There’s a very fine line between being disruptive and just becoming another case study of a failed fintech. We’re hyper aware, the press has been great. We have a lot of good feedback out there.
Warren Wheatley on investing in AltVest through A-trade
Many have already flooded our info box with queries from the BizNews community. We tried our best to be ready for the volume, but we hit a bit of a brick wall just because of the volume of people trying to register. So, there is a backlog in getting people verified. I know how impatient you can get as an investor when you’ve made the decision to trade. You just want to execute. We have a lot of accounts in limbo, which is impacting the depth of the market right now and we apologise to your subscribers and to our community, but please bear with us. We are trying to get all the gremlins out of the system so that the execution cycle is as seamless as possible. We weren’t prepared for the rush, unfortunately.
Koshiek Karan on Umganu Lodge as the first listing in AltVest
The last couple of months have been brutal. Warren and I sifted through roughly ,2000 companies that wanted to be our first listing. We have seen everything from restaurants to food trucks; we even had a guy trying to sell us rhino horn. We had the most ridiculous companies approach us. It is testament to the fact that you can fractionalise anything. But more importantly, – alternative investments are risky – we don’t want to go out there and buy classic cars and stuff focused only on capital gains. We want yielding assets. The last time we said boring is better.
Our first listing is Umganu Game Lodge co-owned with Kevin Pietersen. I’ve had the luxury of staying at the lodge as part of my work. It is an excellent opportunity in that it’s on the fence of the Kruger National Park, and houses 12 people and it is ultra-luxury. What we really like is it’s situated in Elephant Point. We had a chance to look at the properties in Elephant Point. This is the Atlantic seaboard equivalent of the Kruger. It’s absolutely incredible. In the past five years, the average property has increased in value between 15% and 18% per annum in that area. So, you are looking at the higher end, between 20% and 25% a year. We are incredibly proud to bring that to the market as our first opportunity. We have already seen massive demand from private investors in terms of placements in the run-up to the retail issuance. This is testament to just how attractive these types of PE opportunities are and, more importantly, that pent up demand people have for these assets.
Koshiek Karan on the benefits alongside investing in Umganu Lodge
We had an independent valuator come in to assess the value of the land in buildings alone and they came up with the valuation of R30bn. That is before looking at the rental income stream from Umganu. We based our increase of Umganu on the value of the income streams coming in from the rentals, which is extremely conservative. It is based on a very low occupancy rate of 40%. The lodge has been very resilient over Covid-19. In fact, it has been breaking even during [the pandemic], which is incredible in hospitality. But to answer your question, how it is going to work is that retail investors will be able to write a little cheque or they’re going to be able to buy a couple of shares in Umganu. They are entitled to the economic rights of Umganu. They are buying full exposure into the lodge and the economic streams that come from it, both in capital appreciation and in dividends. There’s more… We have a community element to this. What it means is that we’re going to be offering a sweet chiller to the top shareholders. The top shareholders in Umganu – as retail investors – will be able to enjoy right of use at a discounted rate. Most people won’t be able to spend R30k a night in a luxury game lodge. But if you’re a shareholder in this, we are going to do our best to make the gap between you being able to afford that, practical and realistic. So, it is a fully fledged, integrated community model that extends well beyond equity ownership.
- Kevin Pietersen’s Game Viewing Lodge adjoining Kruger Park first underlying listing for AltVest, CTSE’s disruptive newcomer
- Warren Wheatley’s AltVest – May 5 listing on CTSE for R50m fund which opens world of private equity to all
- Altvest: Rethinking the way people invest