Foreign consortium wins V&A bid

The L&R Consortium, which has British, South African and Dubai elements, has been named by Transnet as the successful bidder for the V&A Waterfront in Cape Town.

The bid came in at 7.04 billion rand. Among leading South African black business leaders involved in the project are Vincent Maphai and Hassan Adams.

The Victoria and Alfred Waterfront (V&A) is being sold by Transnet – the umbrella transport parastatal - and its pension funds, Transnet Second Defined Benefit Fund, the Transnet Pension Fund and the Transnet Retirement Fund (TRF).

L&R Consortium, known in full as the London and Regional Consortium - through Lexshell 44 General Trading - has been selected in a transaction process which began in May, but which has been characterised by secrecy.

It is understood that Old Mutual (OML) was among a short-listed group. I-Net Bridge correctly predicted that L&R would win the bid - in a report on Tuesday.

The consortium, selected from nine short-listed bidders based on the evaluation criteria published in May 2006, is a South African company made up of a broad spread of local and international shareholders.

It is led by the United Kingdom based London & Regional Group Holdings Limited. The other members include a 23.1% stake by black economic empowerment shareholders, international property investors Dubai-based investment house Istithmar PJSC, while 2% is held by a consortium to be set aside in a trust for the V&A Waterfront's black workers.

Lexshell's BEE shareholders include Tsa Rona Investments, Decorum, the Western Cape Women's Investment Alliance, Kgontsi Investments and the Cape Empowerment Trust as well as other community organisations.

Transnet Group CEO Maria Ramos - a former director general in the South African Treasury - has described the deal as balanced.

"The V&A linked unitholders are satisfied that the L&R Consortium has successfully fulfilled the stated evaluation criteria with maximum value being realized for the linked unitholders' stakeholders, 74% of whom are pension fund members, while leveraging meaningful BEE participation and retaining jobs of all V&A employees."

"Based on the price offered, the linked unitholders are satisfied that an appropriate value has been achieved from the trade sale process and consequently a possible listing of the V&A Waterfront in terms of the dual track process was not pursued," said Ramos.

At the launch of the sale process in May, Ramos said the linked unitholders wanted their exit to be via a structured, transparent, equitable and value- maximising process.

"These objectives have been accomplished. The disposal process has been implemented according to the highest standards of corporate governance and has been confirmed by KPMG."

L&R Group - one of the largest private property companies in Europe with investments, developments and business interests exceeding euro 7 billion (some 66 billion rand) in over seven countries including the UK, Sweden, Finland, Germany, Poland, Denmark and Russia - has in excess of 50 hotels across Europe and has a development programme of over seven million square feet predominately in London and extensive experience in developing and managing marina and port based developments across the globe.

Istithmar forms part of Dubai World which in turn is held by the Dubai Government. Dubai World is a holding company that manages the portfolio of businesses and projects for the Dubai Government across a wide range of sectors, including famous projects such as The Palm, The World and Dubai Waterfront, to Istithmar, a private equity house.

Ramos said: "This transaction is a major vote of confidence in our economy by international investors. As linked unitholders, we are glad to be able to exit in favour of a consortium that has real prospects of unlocking further value in this prime national asset, whilst bringing with it skills and proven expertise."

Commenting on the transaction, V&A Waterfront board chairman Bulelani Ngcuka said: "The board of directors and executive management of the V&A Waterfront are pleased to welcome the L&R Consortium as the successful bidder in the Trade Sale Process to acquire a 100% stake in the V&A Waterfront. The Board would like to acknowledge the successful bidder's commitment to the evaluation criteria, particularly employee retention and BEE participation, which are vital to the transformation of the local economy."

The transaction is subject to the approval by South African competition authorities and to the extent required, the approval of the South African Reserve Bank.

The TRF, which had the option of retaining its 22.6% interest or increasing it to 26%, has elected to dispose of its stake as well.

Transnet has noted that the successful sale of the V&A Waterfront "is part of Transnet's strategy of selling its non-core assets and enables Transnet to pursue its vision of being the custodian of the ports, freight rail and pipeline businesses in our country". – Donwald Pressly, I-Net Bridge

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