Trustco Group Holdings (Trustco) has indicated it would be giving the Riskowitz Value Fund LP (RVF) new shares in the group in exchange for an 11,35% interest in Legal Shield Holdings.
Trustco already has controlling interest in Legal Shield, but this transaction is set to increase its shareholding to 91,35%.
Damage is set for N$468 million, but no cash will change hands.
Trustco will issue 400 million new shares to RVF at N$1,17c per share in two tranches of 200 million shares each.
The company says this transaction will reportedly strengthen its investment footprint in Namibia’s insurance and property sectors.
Recent financial statements show that Legal Shield was reported to have a fair value of N$1,8 billion at the end of February last year, dropping from N$1,9 billion during the same period in 2022.
This is the biggest asset in Trustco’s books, accounting for over 40% of its N$4,2 billion balance sheet at the end of February 2023.
At this time, Truscto made an interim loss of N$250 million, and only had N$4 million as cash and cash deliverables, its statement of cash flow shows.
A trading statement released late last year shows the company is set to make a loss for the 2023 financial year.
Fortunes have most likely changed, as the company is yet to release its annual statements for 2023, as well as interim statements for 2024.
The possible issuance of shares comes not long after the company had announced that the board had approved a repurchase programme.
Trustco said it believes insurance and property would grow significantly in a post-pandemic era.
The shares to be exchanged involve Trustco Insurance Limited, Trustco Life Limited, and a property portfolio, Trustco says.
The company says it has made over N$934 million by selling or using this land since 2011.
The land is likely to become even more valuable as the average price per square metre of land is already N$1 800, and Trustco believes this would increase in the future.
Trustco says the land has the potential for over 26 000 mixed-use erven to be developed.
Deputy chief executive Quinton van Rooyen says the acquisition capitalises on anticipated capital growth, improved liquidity, and buyer demand in the Namibian property market.
“This acquisition highlights our commitment to creating long-term value for our investors, and allows us to capitalise on the anticipated capital growth, improved liquidity and buyer demand in the Namibian property market.
“By expanding our property portfolio, we are poised to benefit from Namibia’s resurgent property market in the post-pandemic era,” he says.
The property portfolio has serviced more than 1 106 erven across all its developments over the past decade. Moreover, the company ambitiously plans a development pipeline, extending to another 25 years.
The transaction is subject to customary regulatory approvals and is expected to be finalised by 31 July, or as otherwise agreed upon by both parties.
RVF is a hedge fund operated by Protea Asset Management LLC, known for its strategic focus on compounding partners’ capital at a high rate over the long term, while minimising the risk of permanent capital loss.
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