How Standard Bank propped up Sh3.6bn Fahari I-Reit

What you need to know:

South Africa’s Liberty Group, majority-owned by Standard Bank, invested Sh154 million in the offer equivalent to a 4.2 per cent equity.
Stanlib Asset Management, another entity that is ultimately owned by Standard Bank, invested Sh67 million in the offer, taking a 1.8 per cent stake.
Executives working for local units of the multinational also bought substantial units in the I-Reit, further boosting the aggregate funds from the related parties.

South Africa’s Standard Bank and its Kenyan-based executives put Sh594.2 million in a real estate investment fund that was promoted by its local subsidiary Stanlib Kenya Ltd, helping to prop up the offer which also saw the Treasury buy a 7.2 per cent stake.

Regulatory filings show that investments by related parties amounted to 16.5 per cent of the Sh3.6 billion realised in the Fahari I-Reit — which had set a target to raise up to Sh12.5 billion from investors.

Stanlib itself invested Sh367.6 million in the offer, giving it a 10.1 per cent stake and making it the third-largest shareholder. The Fahari I-Reit was listed on the Nairobi bourse in December.

Buyers of the I-Reit shares stand to earn income in the form of distributions from capital gains and rent collected on the portfolio of real estate being put together by the fund managers.

South Africa’s Liberty Group, majority-owned by Standard Bank, invested Sh154 million in the offer equivalent to a 4.2 per cent equity.

Stanlib Asset Management, another entity that is ultimately owned by Standard Bank, invested Sh67 million in the offer, taking a 1.8 per cent stake.

Executives working for local units of the multinational also bought substantial units in the I-Reit, further boosting the aggregate funds from the related parties.

Stanlib East Africa managing director James Muratha bought 258,500 units at a cost of Sh5.1 million, making him one of the largest local individual investors in the I-Reit.

Liberty Kenya Holdings CEO Michael Du Toit, who is also a director of Stanlib Kenya, bought 20,000 units at a cost of Sh400,000 in an investment that made him one of the top foreign individual investors in Fahari. The I-Reit was priced at Sh20 per unit.

The share purchases by the related parties show that the offer would have recorded an even lower uptake if it had only relied on other investors.
Standard Bank is the principal direct and indirect shareholder of Stanlib and Liberty Holdings’ local businesses.

The multinational is also the principal shareholder of Nairobi Securities Exchange-listed CfC Stanbic Holdings that houses CfC Stanbic Bank and SBG Securities among other entities.

While the offer was open to different classes of investors, Stanlib’s role was largely to be that of the I-Reit promoter and manager.