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UAC to Sell off Loss-making Real Estate Subsidiary UPDC

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Nigerian conglomerate United African Company (UAC) plans to sell its majority stake in its loss-making property arm United Property Development Company (UPDC) by July 2020, subject to the resolution of coronavirus disruptions that might affect approval timings, the group managing director said on Thursday.

UAC’s chief executive Fola Aiyesimoju said the group would unbundle the stake to shareholders, subject to regulatory approvals. UAC said it upped its stake to 93.9% in the real estate unit from 64.2% following a rights issue, where it converted its bridge loan to equity to conserve cash.

UPDC, which recorded higher losses in 2019, received a cash injection of N250 million from a share sale in April. UPDC had invested in the luxury real estate market at a time when the Nigerian economy was growing but high interest rates have hurt margins coupled with economic challenges following a recession four years ago before the ongoing pandemic.

The company — with interests in food and restaurants, agricultural feed, paints and logistics — said it expects consumer demand to be constrained and supply chains disrupted with delays to capital investments. UPDC has not paid a dividend to the parent company for some time, but Aiyesimoju said the real estate company was conserving cash especially during the coronavirus pandemic. Shares in UAC lost 1.4% on Thursday to 6.75 naira while UPDC gained 8.7% to 0.98 naira.

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