Vukile Property Fund Ltd. agreed to buy five investment-grade sites from Encha Properties for cash and shares that will see it comply with South Africa’s black ownership laws.
Vukile will pay 800 million rand ($88 million) in cash and issue shares worth 600 million rand to Encha, the Johannesburg-based fund said today in a statement. The properties are “predominantly” occupied by national government departments and four of the five units are in Pretoria, Vukile said.
“Post the transaction, Encha will own an ungeared approximate 600 million rand stake in Vukile,” the company said. “This will represent an approximate 25 percent holding in Vukile, after adjusting for mandated investments.”
South African law requires companies with annual revenue of more than 5 million rand to sell 25 percent of their local operations to black citizens with transactions that benefit workers, women and disabled people favored. The government takes this ownership into account when it decides to buy from private companies.