According to Custodian Investment, this deal would be done in two tranches and will see UAC Nigeria transferring a total of 9,465,584,668 UPDC ordinary shares to it (Custodian Investment).
In a notice to the Nigerian Stock Exchange (NSE) on Monday, it was stated that UAC Nigeria will first sell a total of 946,558,467 shares, representing 5.10 per cent of the issued share capital of UPDC to Custodian Investment on the execution of binding transaction agreements.
The second tranche will have the remaining 8,519,026,201 shares, representing 45.90 per cent of the issued share capital of UPDC transferred to Custodian Investment upon receipt of requisite approvals.
In the statement, Custodian Investment said it has already reached a binding agreement with UAC of Nigeria, which announced the unbundling UPDC from the group last year for better profit.
It was stressed that deal marks the beginning of a partnership between Custodian Investment and UAC Nigeria that will achieve both companies’ respective objectives in the real estate industry, marking a significant milestone aligned with the latter’s strategy to focus on its core businesses.
According to the statement, the “completion of the sale is subject to regulatory approvals from the Nigerian Stock Exchange and the Federal Competition and Consumer Protection Commission.”
Custodian Investment, which offers a wide range of financial products and services, said it views the real estate sector, in spite of its recent challenges, as a complementary sector to its product offering.
It said despite UPDC’s certain challenges in recent times, an investment in the company is expected to provide attractive valuations relative to replacement cost and market values because of both UPDC and UPDC REIT trade at attractive valuations relative to the market values of their underlying assets.
It further said UPDC REIT is highly cash generative with recurring income streams, saying it has distributed an average of N1.4 billion per annum over the last five years.
“Rental income from UPDC REIT is underpinned by leases with first-tier tenants. This presents a good match for our business,” it said.
“UPDC has N10 billion of assets for sale which the management team will focus on realising to provide shareholders with liquidity,” it added.
Custodian Investment said it would leverage on the over two decades of UPDC’s strong track record as a leading developer to drive its core property development business, saying that the recent rights issue to recapitalise the company has stabilised UPDC, thus creating a foundation for growth and added that UAC Nigeria’s continued ownership of a minority interest in UPDC will facilitate a smooth transition.
It was stated that UAC Nigeria is expected to benefit from the deal by allowing the management to be more focus on businesses in sectors that align with its core strategy.
