RDC to raise P235m for regional expansion

Guido Giachetti
Guido Giachetti

Property development company, RDC Properties plans to raise P235 million through an issue of new linked units to shareholders to help fund its expansion plans across the Southern African region.

The company this week revealed it intends to raise the capital by way of a bonus issue as well as by way of a renounceable rights offer.

The price at which the new linked units will be offered will be P2.25 for both the bonus issue and the renounceable rights offer. A bonus issue is an issue of additional shares to shareholders instead of a dividend, in proportion to the shares already held. A rights issue is an offer for shareholders to buy additional securities in a company made to the company’s existing security holders.

“The funds raised will be used to pursue opportunities to increase RDC’s regional exposure in Southern Africa,” RDC said.

New regional developments for the company are earmarked for South Africa, Namibia and Mozambique.

The company said it has identified a property in the central business district (CBD) of Cape Town, South Africa for the development of a hotel, which will house more than 180 rooms and conference facilities.

RDC has signed a Memorandum of Understanding with its business counterparts in Cape Town. The property development will be carried out in a joint venture with the current owners. Preliminary feasibility and projections estimate a total project cost of approximately R190 million (P149.9 million), excluding furniture, fittings and equipment. The RDC participation in the joint venture is expected to be 45 percent with management control.

The company also stated that approximately P70 million of the capital raised from the rights issue will be applied to this project. RDC has also revealed that it has invested in an engineering consulting firm in Mozambique. The other sectors envisaged are the retail and hospitality properties.

“It is anticipated that within the next 12 months, a development project should be identified that ought to provide the required yield,” said RDC.

An estimated figure of P50-P75 million of the funds generated from the rights issue would be applied to the envisaged type of development.

Furthermore, RDC said it is also reviewing opportunities in the retail and hospitality property sectors in Namibia and will possibly pursue an allocation of part of the rights issue cash raised to this area.

“The rental yields are in line with Botswana yields, but the market is deeper and the growth experienced over the last year is anticipated to continue,” said RDC.

The company stated that an estimated figure of between P50-P75 million of the funds raised from the rights issue would be applied to projects in the region.

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