Shareholders of JSE-listed residential property developer Balwin Properties have overwhelmingly approved a proposed takeover by Bidco, clearing a key hurdle for the company’s planned delisting from the Johannesburg Stock Exchange and A2X.

At a general meeting held electronically on Aug. 17, 98.48% of eligible votes were cast in favor of all three special resolutions needed to advance the transaction.

The deal will see a consortium led by the Public Investment Corporation, or PIC, and including Balwin’s founding investors acquire about 49.7% of the company at R4.35 ($0.26) a share. The transaction values Balwin’s equity at about R2.26 billion ($139.1 million).

Shareholders back the deal

Bidco plans to acquire all issued Balwin shares, excluding specified excluded shares. Of the company’s 519.4 million issued shares, 257.75 million were eligible to vote after accounting for excluded shares, treasury shares and shares held by parties acting in concert with Bidco.

A total of 203.23 million shares were voted, representing 78.85% of eligible shares. All three resolutions received the same 98.48% approval, with 1.52% voting against. Abstentions accounted for 0.01% of total issued exercisable shares.

The resolutions covered approval of the scheme of arrangement, the possible revocation of the first resolution if the required conditions are met, and financial assistance related to securities transfer tax arising from the transaction.

Conditions still remain

Shareholder approval does not complete the takeover. The scheme remains subject to the fulfilment or waiver of the remaining conditions set out in the circular issued July 17.

Balwin’s board said the required shareholder approval had been obtained and that the scheme would proceed, while noting that the outstanding conditions must still be satisfied or waived where permitted.

The company said shareholders would receive another update through the Stock Exchange News Service, or SENS, once the remaining conditions and finalisation details are settled.

Bidco is backed by existing shareholders and strategic investors, including entities controlled by Brookes and managing director Rodney Norman Gray, GRE Africa Ltd. and the PIC, which is acting on behalf of the Government Employees Pension Fund.

Balwin’s listing comes to an end

Founded in 1996, Balwin has grown into one of South Africa’s largest developers of sectional-title apartment estates, with a focus on affordable and lifestyle-oriented housing.

The company listed in 2015 to gain access to capital markets. Since then, however, its shares have faced limited liquidity and traded at a persistent discount to the value of its underlying assets. The costs and demands of maintaining a public listing also weighed on the case for remaining on the exchange.

Balwin’s latest financial results showed a stronger operating performance. Revenue rose 21% to R2.7 billion ($166.4 million) in the financial year, from R2.2 billion ($135.62) a year earlier, while annual profit increased 9% to R254.5 million ($15.69 million).

Total assets increased 4.37% to R8.44 billion ($520.38 million) from R8.09 billion ($498.8 million), while retained income rose 7.74% to R3.77 billion (232.44 million) from R3.5 billion ($215.79 million).

Despite the improvement in earnings, management chose not to pay a dividend, opting instead to preserve cash as the company manages its financial position and prepares for the next stage of the transaction.