Redefine Properties is looking to team up with an Australian company to provide student housing in that country and is set to announce various offshore acquisitions this year.
Redefine CEO Andrew Konig said on Monday in an address ahead of the closing period that given weak economic growth, a volatile rand, and how challenging raising capital had become in SA, his company would expand offshore more aggressively than it had in the past. This expansion would be across various geographies, as Redefine looked for attractive opportunities.
The group invests directly in Australia through a holding in Australian stock exchange-listed Cromwell. Last year, it invested a R1.6bn in Cromwell, taking its stake near 26%, worth R4.3bn.
“We are working on a potential deal with a joint venture partner in Australia involving student housing. It’s not one of our largest transactions and we would spend about $40m, but we like it and we believe we can do exciting things in the sector,” said Mr Konig.
Redefine chairman Marc Wainer said it wanted a presence in Spain, but had not found apt opportunities yet.
“I have been looking at many countries for opportunities. In Spain, we have identified two call centres, which look attractive, but this deal is still in the early stages,” he said.
Redefine did not want to overspend in any market, but it could soften challenges with its South African portfolio by growing offshore, he said. On Tuesday, it is to announce a substantial acquisition that market commentators predict will be in Poland.
Some analysts have said Redefine’s opportunism could spread its operations too thinly and that some offshore acquisitions this year could be duds.
“Redefine should go offshore if and to the extent that they can do deals that can add demonstratively more value than South African shareholders can achieve themselves,” said Evan Robins, listed property manager of Old Mutual Investment Group’s MacroSolutions boutique. “This is a tough hurdle.”
Redefine tended to look offshore for investment opportunities, but risked spreading themselves too thinly, Mr Robins said. “Australian student housing would be an example of this.”