Tuesday, March 5, 2024

BDC reduces stake in LLR, and goes international

Botswana Development Company (BDC) has reduced its stake in one of this year’s top performing listed companies – Letlole La Rona (LLR) in a deal that saw shares exchanged with a Pan African property real estate group – Grit Real Estate Income Group Limited. The BDC has in turn become a shareholder at Grit.

BDC, the 100 percent government owned investment arm, and main shareholder in the BSE quoted property firm – LLR has reduced its stake in the company to 40 percent after disposing 66.5 million shares to property investor Grit Real Estate Income, as the London Stock Exchange (LSE) listed firm upped its stake in LLR from 6.25 percent to 30 percent, making it now the second main shareholder.

The acquisition of BDC’s stake in LLR by Grit will be settled through share consideration, with the international property investor paying for LLR shares by issuing 9.8 million shares to BDC, which is equivalent to P150 million, and gives the government investment arm a 3.1 percent shareholding in Grit.

The multi-million-pula deal appears to have been spearheaded by the London property outfit which says Botswana as an investment jurisdiction satisfies Grit’s key investment criteria given its economic growth, politically sound environment, investment grade rating, availability of debt funding, ease of repatriation of funds and security around land tenure

“The Transaction is expected to help Grit increase its exposure to the Botswana property market with sufficient scale and corporate infrastructure and unlocks a strategic partnership with BDC as both an institutional investor in Grit and a potential co-investor in direct property opportunities throughout Africa,” Grit said in a statement to shareholders.

The deal further comes at a time when LLR is riding high bolstered by growing profits, strategic exits, and a soaring share price. The property company is now the top performing stock on the BSE after its share price value surged 24.4 percent in year to date returns. The stock is currently trading at P2.20.

According to LLR’s 2019 annual report released this week, the company owned 20 properties worth P774 million, the majority of which are in the greater Gaborone area.  LLR’s property portfolio is spread 56.2 percent in the industrial sector, 30.3 percent in retail, 6.3 percent in commercial and 6.2 percent residential. The company is still fresh from disposing of all its hospitality assets for P235 million in the financial year ended 2019, the proceeds of which will be deployed into LLR’s pipeline of yield-enhancing investment opportunities.

“We are pleased to announce this further increase of our stake in LLR, which represents an opportunity to utilise LLR’s local expertise and to gain exposure to exciting asset management opportunities whilst significantly increasing our presence in Botswana, a key market for Grit’s future growth. I look forward to working with Chikuni Shenjere-Mutiswa and the LLR team to expand its leading property portfolio and creating further value for shareholders in both Grit and LLR,” said Bronwyn Corbett, chief executive officer of Grit.

Commenting also on the transaction, Chikuni Shenjere-Mutiswa, chief executive of LLR, said “I’m proud of what LLR has achieved in the eight years since the company listed on the Botswana Stock Exchange. We are very excited about the prospects for the business through our collaboration with Grit as LLR becomes Grit’s partner of choice for real estate in Botswana and the wider region, delivering strong portfolio growth, as well as a sustainable income stream for shareholders.”


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