CPC Omajowa prioritises investment

Namibia enjoys an unusually high savings rate, however, the bulk of Namibia’s savings continue to be channelled into the South African market.

04 August 2020 | Business

The local market remains handicapped by a lack of investment opportunities combined with limited liquidity. – Omajowa Ltd

Phillepus Uusiku - Omajowa Ltd, with the assistance from its asset manager, is far advanced in the preparation of the first circular to investors with a portfolio of investments in the focused investment area within the stated strategy, the company said when it listed as a capital pool company on the Development Board (DevX) on the Namibian Stock Exchange (NSX) on Friday.

Omajowa has been formed to invest in income generating assets in the real estate sector. To achieve this goal, Omajowa will focus on utilising equity, but may also utilise debt finance, or a combination of both including quasi-equity, the company said in a statement.

To put it into perspective, Omajowa notes that Namibia enjoys an unusually high savings rate and a well-managed investment industry. However, the bulk of Namibia’s savings continue to be channelled into the South African market.

“The local market remains handicapped by a lack of investment opportunities combined with limited liquidity,” Omajowa said.

“In addition, Namibia’s real estate market has historically shown stable growth in the affordable residential rental space. With the well-priced assets currently available, as targeted by Omajowa, this demand is expected to provide steady growth in the medium to long term for the portfolios being acquired.

“This is supported by the fact that demand for affordable well managed rental units far outstrips supply in this sector of the Namibian real estate market,” the new CPC said.

Therefore, against this background, the promoter has identified the opportunity for the creation of a dedicated, NSX listed, property investment company in the form of Omajowa.

Omajowa will target property investment opportunities purely driven by sound commercial considerations.

Rationale

The current slow recovery of the Namibian economy out of a few years of recession prompted the promoters to proceed with this listing, with the aim of having at least a two-thirds residential rental component, Omajowa said.

“The Covid-19 pandemic impact is still to be completely gauged and interrogated but, given the long-term view of the promoters, has the potential to enhance investor returns.

“The main motivators for the timing of this listing are the decision to proceed with the listing in these times is to ensure the investor enters this market segment at the lower end of the market,” according to the company.

The promoters believe strongly that the growth prospects, particularly in the market segment focused on, will be positive in the medium to longer term.

Omajowa continued: “Furthermore, the portfolio acquisition price should be negotiable to a discount to the market given the relative size of the investment that Omajowa would be able to make. Based on current short-term negative sentiments and a general price correction in mainly the residential market segment, we believe this to be an achievable target.”

The increased credit criteria for home buyers are also continuously feeding the residential rental market as well as providing flexibility of tenure to users of the rental spaces provided.

Similarities with SA

There are enormous similarities with South Africa during the 2008 residential market decline, since then there was a sizeable move away from owning a property to rather renting, Omajowa said.

Rental is still more affordable and provide the required mobility for end-users of residential space in this market segment.

“This trend is already starting to happen in Namibia, with this listing in the fore front of making it possible for investors to enter into an asset class with tremendous growth potential.”

Festus Hamukwaya is the chairman of Omajowa. The other executive directors are Carel Fourie, Adeline Beukes and Barend Christiaan Verhoef, while Tomas Iindji, Brian Katjaerua, Dorethy Elizabeth Smit and Pieter Willem Jacobus Reynekeare non-executive directors.

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