Johannesburg - Balwin Properties made its debut on the main board of the JSE yesterday with its first trade at R11 giving the company a market capitalisation of R5.2 billion. The company was anticipating having a market capitalisation on listing of between R4.2bn and R4.7bn.
A total of almost 5.7 million shares were traded in the company, which is one of the country’s largest homebuilders, focusing on large sectional title residential estates in metropolitan nodes, with the share price hitting a high of R11.05 and a low of R10.20 during the day.
The share closed yesterday at R10.20, which valued the company at R4.8bn.
Stephen Brookes, the chief executive and founder of Balwin, said the listing marked the next chapter in the company’s growth path and paved the way for it to accelerate its delivery of about 17 000 homes in the next eight years.
Prior to listing, Balwin raised a total of R1.76bn through a significantly oversubscribed offer and placement of about 178.2 million shares with invited investors at R9.88 a share, which was at the upper end of the pricing range. The offer represents 32.85 percent of Balwin’s issued share capital.
Prior to the listing, Balwin was owned 70 percent by management and 30 percent by private equity partner Buffet Investments. The founding directors have remained the largest shareholder group post listing.
Brookes said the capital raised through the listing would allow Balwin to acquire and secure land for future development to maintain its development pipeline.
Additional land
“To this end, we are currently in discussions to acquire an additional land parcel in the Kyalami node on which a further 15 000 sectional title residential units could be developed,” he added.
Balwin believes it is differentiated from other JSE-listed property entities or real estate investment trusts (Reits) because its business strategy is underpinned by the generation of profits through the development and sale of large-scale residential estates averaging between 500 and 1 000 units that offer affordable one, two and three bedroom apartments ranging in size from 45m² to 120m².
The company also maintains it is not a speculative builder, because it constructs and sells its developments in several phases, according to demand.
Balwin plans to develop, retain and manage a rental portfolio of between 2 000 and 3 000 units by 2020, which it believes will generate up to R3bn in revenue.
It will re-invest 70 percent of after tax profits back into the business to support superior net asset value uplift and distribute the remaining 30 percent of profits to shareholders.
Balwin said in its prelisting statement that it currently developed and sold between 1 750 and 2 000 sectional title units a year, but had the ability to increase its development capacity to about 3 000 section title units a year.
Brookes said Balwin was on track to sell more than 1 600 units this year and deliver an after tax profit of about R550 million for the financial year to February next year.
BUSINESS REPORT