‘Land’ is arguably one of the most emotive issues in South Africa today. Even if one only focuses on the past 50 or so years, it is quite clear that white South Africans with access to land – and the associated gearing plus above inflation increases – enjoy a significant benefit over their black counterparts.
For this reason, I have always been intrigued to watch the development of JSE-listed property group Rebosis
, which was the first black-owned property group to list on the bourse on May 17 2011. While out-and-out land ownership is likely to remain out of reach for the majority of the South African population for the time being, property ownership isn’t and while doing some research, I came across a really interesting statistic relating to Rebosis.
For those who are familiar with shares listed on the JSE, the majority are owned by investment and pension funds, as well as well as major asset management groups. Unlike Australia and the US, we have a very low percentage of our population who are direct owners in listed businesses with the majority preferring to invest through unit trusts and retirement annuities – and, with the huge rise in popularity for exchange-traded funds (EG. Satrix), this situation will continue.
The ‘problem’ with this is that it means that we don’t enjoy an ownership culture and we battle to transfer wealth through multiple generations (simplistically because people cash in their retirement money for consumption purposes).
When one looks into the annual reports of listed companies, you can identify how many shareholders hold what percentage of shares in the company. In other words you can identify the ‘small’/retail shareholders who have made an active decision to invest in the company.
In the case of Rebosis:
- According to its 2012 annual report, it had just 112 shareholders who held less than 1 000 shares in the company and 131 who held less than 10 000 shares but more than 1000 shares).
- According to is 2015 annual report this number of shareholders, with less than 1 000 shares, had jumped to 1 403 (now representing 205 717 shares), while 1 145 shareholders now held less than 10 000 shares, representing 4.16 million shares.
In a relatively short space of time, Rebosis has managed to grow its retail shareholder base by nearly ten times.
“But wealth is also of particular concern for long-term inequality. This is because wealth can generate its own income (such as interest, dividends, rents, and capital gains), and can be passed on between generations. Over time, small differences in assets can therefore grow larger and larger. As Thomas Piketty argues in his influential book on wealth and inequality (Capital in the 21st Century), this tendency has been one of the biggest drivers of growing inequality in both advanced and developing countries.”
For me, this is one of the reasons that I find the Rebosis story interesting. CEO Sisa Ngebulana has been held up as a fabulous success story in a sector which is particularly emotive in South Africa’s history and as a business, it has regularly been held up as example of wealth creation through the JSE to investors who have historically not directly participated through equity.
While many might turn around and argue that 1 403 retail investors under 1 000 shares and 1 145 is not a particularly significant milestone – despite the rapid acquisition – the wealth transition is particularly interesting:
If you take the 205 717 shares divided by 1 403 shareholders, you get an average holding of 146 shares each which, at the current market price, is a portfolio of R1 686 – certainly nothing to write home about. However if you move from the 1 001 shares to 10 000 shares category, then this jumps to 3 640 shares with an average market value of R41 865 and you are picking up an average dividend of R2 511 per year.
Rebosis is building some very real wealth among entry levels investors and it deserves kudos for its efforts at getting new investors into the market.
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