Last week, in his medium-term budget framework, Finance
Minister Pravin Gordhan announced that all inwardly listed shares on the JSE
are to be classified as local stocks.

The companies can consequently be taken up in the JSE’s
indices. This was not previously possible because local institutional investors
were unable to buy the shares without restrictions.

CapCo, which was unbundled out of the shopping centre giant
Liberty International [JSE:LBT] last year, had a primary listing on the London Stock
Exchange but could not get permission from the South African authorities for a
dual listing on the JSE.

The business therefore had to have an inward listing on the
JSE. This was a significant obstacle for South African institutional investors,
as they would need to use their foreign allowance to invest in the company.

After the unbundling many sold their shares and the
company’s South African shareholding dropped from 46% to 20%. This included the
Gordon family shareholding.

Institutional investors will now be able to trade CapCo
shares freely, a step welcomed with open arms by South African institutions as
well as by CapCo.

CapCo financial director Soumen Das said that, although it
was still a proposal and more details needed to be announced, he was fully
confident that it would be easier for South African investors to invest in the
share.

Evan Jankelowitz, a director at Sesfikile Capital, said
South African institutions would receive free access to world-class assets,
thus improving their investment choices.

Coronation property portfolio manager Anton de Goede said
the lifting of local mandate restrictions on owning CapCo shares meant that
South African institutions could fully participate in the unlocking of value.
The company focuses on properties in Central London.

He said the unlocking of value takes place not only in the
redevelopment of Earls Court, but also in the repositioning of Covent Garden as
a prime retail destination in London.

The company this year submitted planning applications for
the development of the Earls Court premises comprising some 31.5ha in Central
London, the West Kensington and Gibbs Green housing estates, as well as an
application for the development of the Seagrave Road car park. This is the
largest planning application in London to date, involving some 8 300
residential units.

CapCo has not disappointed investors who held on after the
unbundling. De Goede said management had successfully applied the strategy
announced during the unbundling and had even exceeded its own expectations in
terms of rental growth at Covent Garden. In the six months to the end of June
this year rental growth of 6.3% had been achieved by the iconic asset. 

The 31.5ha planning application is the largest yet lodged in
London for the construction of around 8 300 residential units in Central
London.

The new Burberry store at CapCo’s Covent Garden in the heart
of London.

 – Sake24

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