A 100% upfront tax deduction on the investment means an immediate return of up to 45c for every R1 invested*
while the investment portfolio generates ongoing yields and capital appreciation on its asset portfolio comprising a combination of hospitality property assets, student accommodation and high yielding moveable asset businesses. (*Assuming a max. tax rate for an individual investor of 45%)
Ranging from boutique hotels to serviced apartments
Despite a challenging political landscape, South Africa has shown a steady growth in international and local tourism numbers over the past 10 years, with a strong projected growth for the foreseeable future. The number of international tourists is estimated to have increased by 18% per annum from 2013 till 2018. The forecasted growth for the next 4 years is estimated to be over 16% per year. In addition, business travel also offers and important income stream for appropriately positioned hospitality properties.
Quality business and leisure hospitality properties are therefore in high demand. This together with government’s drive to stimulate investment into the tourism industry, by allowing leisure hospitality properties to qualify as Section 12J investments and the relaxation of tourist visa regulations, creates an attractive opportunity in the market for investors.
Investing in hospitality properties that deliver above average capital growth and good yields, combined with the Section 12J Tax benefit for investors, makes business and leisure hospitality property an important investment focus for the fund.
High yields and prepaid income due to high demand and shortage in accommodation
According to the Department of Higher Education and Training, there are currently a shortfall of approximately 220,000 student beds in South Africa and an ever increasing high demand.
Based on predicted future enrolment numbers, the current shortfall is expected to widen even more over the next few years as it is projected that by 2030 an extra 400,000 beds (excluding the current shortage), would be needed to meet the enrolment targets set out in the Post-School Education and Training policy and the National Development Plan. This together with the government’s drive to alleviate the student accommodation shortfall by allowing these student hospitality properties to qualify as Section 12J investments, creates an attractive opportunity in the market for investors. Investing in quality student accommodation properties, combined with the Section 12J Tax benefit for investors, makes student hospitality accommodation and important focus for the fund.
MOVEABLE ASSET RENTAL BUSINESSES
Predictable returns and income streams
The asset rental market in South Africa is estimated to be worth between R6bn and R7bn per annum. Many corporates and SME’s use rental finance as a means to procure the use of depreciating assets in their business rather than buying assets, while suppliers are looking for tailor-made financial solutions to offer their products to their clients.
The Invest Shariah 12J Fund invests in businesses which secure moveable assets and offer it to their B2B clientele on a rental basis. The fund considers various types of moveable assets for investment, including but not limited to office automation, telecommunications, information technology, security and medical equipment as well as yellow metal such as graders and excavators to name a few. Investments are considered together with the equipment suppliers or on a stand-alone basis, and in combination with the Section 12J Tax benefit for investors, makes investments in moveable assets an important part of the focus for the fund.
How It Works
A 5 Year+ investment horizon with predictable returns, spearheaded by an immediate tax benefit.
Subscribe for Shares
Minimum investment of R1 million - by invitation only for qualifying investors. Each investor subscribes for shares in the Prudential Shariah S12J Investment Fund, at R1,000 per share.
Upfront Tax Benefit
Receive a Section12J Tax certificate and get up to R450,000 tax back for every R1 million invested (being a reduction in tax payable or tax to be claimed back assuming a max. tax rate for individuals of 45%). This means your investment risk is limited to the investment amount less your tax benefit (Risk Capital Invested), but your growth is achieved on the full asset value (being the amount before the tax benefit).
Estimated annual dividends of 6-7% on Risk Capital Invested (estimated only, not guaranteed). We invest in assets with predictable returns including student accommodation which in many cases are pre-paid for a year in advance, to hospitality properties and moveable asset rentals that provide steady and predictable yields.
Fund liquidated after 5 years
After 5 years, all assets will be sold and all available profits and net cash will be distributed to Investors. We estimate an IRR return of 15%-18% per annum on Risk Capital invested - that's approximately getting 2.5 times your Risk Capital Invested back as final dividend return (estimates only, not guaranteed).
TERMS AND CONDITIONS (1) Invest Shariah 12J Fund (Pty) Ltd (in the process of being renamed from Prudential Shariah S12J Investment Fund) (company registration number: 2016/458652/07) is: (a) A Shariah Compliant investment product; and (b) A registered and authorised financial service provider (FSP registration number 47715); and (c) A registered Section 12J Venture Capital Company (SARS registration number VCC-0054). (2) DISCLAIMER: The content provided on this website does not constitute as solicitation, guidance, proposal, invitation or investment recommendation or advice, and prior to considering such an investment, we recommend prospective investors seek specialised financial, legal and tax advice. (3) Please further note that an investment in the Invest Shariah 12J Fund is by invitation only and not available as an offer to the public, with a minimum investment requirement of R1 million per investor. To enquire about investments, and see if you qualify, please complete the contact us form on our website and we will put you in touch with one of our senior executive and FCSA registered representatives. (4) All potential benefits and savings referred to on this website relate to a potential income tax saving should the investors deduct their full investments for income tax purposes in accordance with section 12J of the Income Tax act, assuming the client is in the highest tax bracket of 45% for individuals and trusts and 28% for companies (being their assumed effective tax rate saving), and assuming the investment is made in qualifying entities and the Investor qualifies for the tax benefit.