DURBAN - Kuwait’s IFA Hotels & Resorts announced yesterday that they have started a joint venture with boutique financial consulting firm Jaltech to create a R2 billion property fund.
The property fund, Zimbali Capital, is a Section 12J Venture Capital Company that will allow IFA and its associate partners to raise capital under the Section 12J scheme for both their hospitality and student housing projects.
Section 12J is a fairly new income tax dispensation that can help small and medium enterprises (SMEs) to raise capital from South African taxpayers.
South African taxpayers are incentivised to invest into Zimbali Capital by getting a return on their whole investment and a tax cut on their taxable income before the end of the 2018 tax year.
This deduction results in a tax credit between 28% and 45% dependent on whether the investor(s) are individuals, companies and/or trusts.
Werner Burger the Chief Executive of IFA Hotels & Resorts, South Africa said, "The attraction of investing into Zimbali Capital means that, under Section 12J, the cost of your investment is effectively reduced".
From a macroeconomic point of view, and in the spirit in which Section 12J was created, Zimbali Capital will act as a catalyst for job creation, in sector slike construction and the tourism and hospitality.
The Zimbali brand has had success in the property sector and is now looking to raise capital for the first of Zimbali Lakes Resort’s hospitality projects, called Boulevard PAD.
The fund for Boulevard PAD will end at R100 million. Besides hospitality projects in Zimbali, Zimbali Capital will invest in Legend Hotel in Limpopo and De Zalze Lodge in Stellenbosch.
Burger explained, "Zimbali Capital will not only provide a vehicle for South African taxpayers to reduce their tax liability but also an exceptional investment opportunity through its hospitality and student housing products".
According to Burger, shareholders will see the benefit of their investment because of the huge potential for investors to see a return on their investment earned through short and long-term rentals at Boulevard PAD.
Jonty Sacks a partner at Jaltech said “Zimbali Capital, unlike the majority of the hospitality-focused Venture Capital Companies, will not be sitting on funds in the hope to find an attractive investment opportunity. IFA Hotels & Resorts have an extensive pipeline of developments which they are looking to roll out in the short-term. This will give investors the reassurance that their funds are made to work within a short period of time.”
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