Custodian Investment Plc has signed a binding agreement with UAC of Nigeria Plc to purchase a 51 per cent equity interest in UACN Property Development Company (UPDC) Plc.
In a notification to the Nigerian Stock Exchange (NSE), yesterday, the Group Managing Director, Custodian Investment Plc, Mr. Wole Oshin, said the agreement marked the beginning of a partnership between Custodian and UAC that would achieve both companies’ respective objectives in the real estate industry.
The deal would involve the sale of sale of 9,465,584,668 UPDC ordinary shares held by UAC, representing 51 per cent of UPDC’s issued share capital, to Custodian. The shares would be sold in two tranches, that 946,558,467 shares and 8,519,026,201 shares.
Commenting on the partnership, Oshin said: “We at Custodian are excited about the possibilities arising from this partnership with UAC which provides multiple levers for value creation. The rationale for the transaction is that Custodian and UAC share the view that their ambitions for capturing opportunity in the real estate industry will be better achieved working in partnership.”
UPDC is one of Nigeria’s leading real estate development companies, having completed several landmark residential and commercial developments over the past twenty years. This transaction will provide Custodian with a platform to capture arising real estate opportunities. It also immediately provides recurring cash flow visibility and attractive yields as a result ofits direct exposure to Nigeria’s leading real estate investment trust (UPDC REIT) with a track record of profitability and annual dividend distribution which offers a good compliment for our product portfolio. We are confident that the recent recapitalisation of UPDC, significant reduction in finance costs, and recently reconstituted leadership have repositioned the company to operate sustainably and capture growth opportunitiesaimed at increasing stakeholder value going forward.”
Also commenting, Group Managing Director of UACN, Folasope Aiyesimoju, said: “The transaction is a significant step in achieving our objectives for UPDC .In 2018, the board and management of UAC embarked on a strategic review to evaluate the performance of the company and its subsidiaries.
“The objective was to achieve sustainable positive financial performance from our existing operations and enable management focus on businesses that align with our strategy. In reviewing UPDC, the board weighed the long-term opportunities in the Nigerian real estate sector against the fundamental differences between the cash flow profile and capital needs of UPDC and those of the other entities in UAC’s portfolio.”
Following its review, the board concluded that it would be in the best interest of UAC to exit its interest in the real estate sector, allowing UPDC to operate as a standalone legal entity, free to source appropriately structured capital and to unlock value for its shareholders.