SIMPLIFYING its share model will unlock opportunities for JSE-listed Dipula Income Fund, its chief executive Izak Petersen.
This follows an announcement the real estate investment trust (REIT) company made on Thursday that its shareholders had approved it simplifying its dual share model into a single class of ordinary shares.
Dipula said all resolutions required to be passed by its shareholders to approve the scheme were met by the requisite majority of shareholders.
Dipula's current capital structure comprises listed DIA shares and DIB shares. DIA shares have preferential entitlements to dividends, if declared, which grow annually by the lower consumer price index and 5 percent.
DIB shares were the “ordinary” equity of Dipula, receiving any residual dividend after settlement of the DIA shares’ preferential dividend entitlement, Dipula said.
"In terms of the scheme of the arrangement, Dipula will buy back and cancel all its issued DIA shares at a swap ratio of 2.4 DIB shares for every DIA share in issue," it said.
Petersen said the new structure meant that the company had one set of shareholders instead of two.
"This is great for us in terms of the future capital value. For the value unlock point, we have now the ability to raise money for our extensions, and fund capital expenditures.
Petersen said the new structure would help the company take advantage of many opportunities it couldn’t take advantage of previously due to the wrong pricing of its share.
He said potential investors had found Dipula's structure unattractive. However, the new structure would help the company be more tradeable because now it has a broader spread of shareholders.
"Not only that, but we also have many shares on the issue now compared to previously," he said.
"We are very encouraged by the confidence the market has shown us. We now know that the market has recognised the growth potential of Dipula. To come off from a very low base, we can only improve from this point on," he said.
Looking ahead, Petersen said Dipula could now realise its full potential, use its opportunities in South Africa and reposition itself.
While the REIT sector was showing signs of recovery, it hadn't fully healed from the Covid-19 pandemic.
"If we look at the performance of the REIT sector in 2021, there was a big recovery compared to 2020 due to the Covid-19 pandemic. Most REITs have started paying dividends, the flow of dividends is important to the market," he said.
"Although we haven’t reached the pre-Covid levels, we are definitely on a path of returning to paying dividends to investors. I think there is still a lot of room for recovery. There is still value in the sector," he said.
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