Download formal ballot letter HERE.
Cloud Atlas (RF) Proprietary Limited
The Cloud Atlas Collective Investment Scheme in Securities
AMI Real Estate ex-SA ETF
JSE code: AMIRE
A portfolio in the Cloud Atlas Collective Investment Scheme in Securities, registered as such in terms of the Collective Investment Schemes Control Act, 45 of 2002.
BALLOT VOTING PROCEDURE IN RESPECT OF THE AMENDMENT OF THE AMI REAL ESTATE EX-SA ETF INTO PARTICIPATORY UNITS IN THE CLOUD ATLAS S&P AFRICAN SOVEREIGN BOND ETF
The information as it appears below has been extracted from the Cloud Atlas Team, the Third Supplement to the CA CISIS Programme Memorandum and the Ballot Letter of the Proposed Amendment of the AMI Real Estate Ex-SA ETF and utilises the terms and definitions contained therein.
Cloud Atlas Collective Investment Scheme proposes to holders of the AMI Real Estate ex-SA ETF (‘old fund’) the conversion of the participatory units in the ETF to the Cloud Atlas S&P African Sovereign Bond ETF (‘new fund’) of CA CISIS, which tracks the S&P Africa Hard Currency Sovereign Bond Select Index) via Ballot.
Cloud Atlas has the notion of providing investors with exposure to the opportunity presented by Pan African markets, which at times may be hard to access. In doing so, Cloud Atlas sought to amend existing AMI Real Estate ex-SA ETF to be better suited to investors in provision of the Pan African investment opportunity, by presenting a fund which has more liquidity, a larger market value size, no local currency risk and tracks paper issued by Sovereign Governments.
The outbreak of Covid-19 has echoed the need for investors to re-assess the approach to investing and the property sector was one of the hardest hit sectors further exacerbated by historically subdued returns. In doing so, Cloud Atlas seeks to introduce investors to another asset class with the same Pan African exposure but with an amended investment philosophy. These proposed changes will eliminate some of the risk encountered when investing in multiple African markets while still providing investors with exposure to low risk, predictable income and liquid listed securities.
In the approach to the amendment of the AMI Real Estate ex-SA portfolio, Cloud Atlas considered experience with the Big50 and trading in Africa on a custom index Therefore, it is more prudent to strike a partnership with a reputable index house, being S&P, to develop a Select index which tracks African hard currency bonds while giving investors peace of mind.
- Overview of Index Construction
The S&P Africa Sovereign Bond Indices track the market-value weighted performance of sovereign bonds from 13 countries within Africa. There are two main indices: The S&P Africa Sovereign Bond Index and the S&P Africa Hard Currency Sovereign Bond Index. Certain capped indices are also available which limit the weight of an individual country.
The S&P Hard Currency African Sovereign Bond Select Index is comprised of bonds issued by African Sovereign Governments denominated in Euros, Japanese Yen, and U.S. Dollars from the African countries with a credit rating above B-, currently: Egypt, Ghana, Kenya, Morocco, Namibia, Nigeria, and South Africa.
The index is a sub-index of the S&P Africa Hard Currency Sovereign 1+ Year Bond Index with the goal of selecting tradable, high income securities. Constituents must have a maturity of at least one year from the rebalancing reference date and be rated B- or above from all of S&P Global Ratings (SPGR), Moody’s, and Fitch.
The changes to the Portfolio are summarised as follows:
|Cloud Atlas AMI Real Estate ex-SA ETF||Cloud Atlas S&P African Sovereign Bond ETF|
|Risk level||Low – Medium||Low|
|Geographic exposure||Africa ex-SA||Pan African (including South African)|
|Countries||Egypt, Mauritius, Morocco, Namibia||Egypt, Ghana, Kenya, Morocco, Nigeria, South Africa|
|Security type||Property and development||Government guaranteed bonds|
(Not mandated as with a REIT)
(Annual and semi-annual)
|Investment term||Long-term||Across short, medium and long term|
|Currency risk||High – Local currency||None – Hard currency (US Dollar Bonds)|
|Trading exchanges||Local bourse||London, Luxembourg and New York|
|Security issuer||Public companies||Sovereign Governments/Central Banks|
|TCF||Six pillar approach||Six pillar approach remains however given that the underlying trade in higher sizes investors the amount of cash required to by an ETF increases|
|Pricing||850 divisor of index level roughly R 30 per ETF||0.95/1.00 divisor of the index level roughly R150 (~U$10) per ETF|
- Balloting of Investors
There will be a fractionalisation of existing holdings to Cloud Atlas S&P African Sovereign Bond ETF, where 1 unit of Cloud Atlas AMI Real Estate ex-SA ETF will be a fraction of the Cloud Atlas S&P African Sovereign Bond ETF and the units will be rounded up or rounded down accordingly when necessary. The Mangers will inject funds for holders with end up with less than 1 unit of Cloud Atlas S&P African Sovereign Bond ETF. As at the last practicable date the amount of money expected to be injected by the Managers in the regard is R20,000, 00.
The ballot affords investors an opportunity to vote in favour of, or against the proposed amendment. The investors who hold issued participatory interests will have the number of participatory interests converted at a fractional rate which will be published in the results announcement to be release on Thursday, 24 June 2021, the details relating to the listing mainly: trading ISIN and Ticker will also be amended. The amended participatory interests will be equal in market/monetary value to the participatory interests held before the amendment.
The rights of investors are firmly entrenched in the Collective Investment Schemes Control Act and the Section 59 of the Scheme Deed summarised below. The Authority of Collective Investment Schemes requires that:
- Investors, holding no less than 25 % in value of the total number of participatory interests must respond in writing in a ballot conducted by the Manager.
- Where the amendment affects more than one or all the portfolios in the scheme, Investors holding no less than 25 %, must respond in writing. The amendment must be consented to by Investors holding a majority in value of the participatory interests held by the Investors who have responded.
- If less than 25 % of Investors of the total number of participatory interests respond, a second ballot will be conducted. In this ballot Investors holding a majority in value of the participatory Interests held by the Investors who have responded, must consent to the amendment.
- All Registered Investors are not obliged but may vote in the case of a ballot in respect of each participatory interest held.
- Only ballot papers which are received by the Manager within thirty business days after dispatch to Investors may be taken into account and be regarded as valid.
- Approval and Commencements
Approval for the Amendments was granted by the JSE on Thursday, 15 April 2021.
Subject to the ballot voting procedure being successful, the Amendments will be with effective from commencement of business on Wednesday, 9 June 2021. Copies of the Cloud Atlas S&P African Sovereign Bond ETF Supplement, in English, may be obtained on the website:
5. Salient dates in respect of the Amendments are set out below:
|Record date of eligible investors to participate in the ballot||Friday, 9 April 2021|
|Issuance of SENS on amendments and ballot letter at 09:00 on:||Thursday, 15 April 2021|
|Publication of the listing Supplemental for the new ASBI fund||Thursday, 15 April 2021|
|Last day for eligible investors to respond by vote on ballot: in-favour-of/against/abstain the proposed amendments.||Wednesday, 26 May 2021|
|Publication of SENS announcement on the results of ballot||Wednesday, 2 June 2021|
|Finalisation announcement||Wednesday, 9 June 2021|
|Fraction announcement on SENS by 11:00:||Thursday, 10 June 2021|
|Last day to trade participatory interests in the existing fund AMIRE ISIN ZAE000254595||Tuesday, 22 June 2021|
|Suspension of trading of the existing AMIRE fund||Wednesday, 23 June 2021|
|List and Trading in the new fund ASBI ISIN ZAE000297354||Wednesday, 23 June 2021|
|Record date of dematerialised security holders updated at CSDPs or Brokers:||Friday, 25 June 2021|
|Accounts of dematerialised securities holders of the new fund ASBI ISIN ZAE000297354 updated at their CSDPs or brokers||Monday, 28 June 2021|
|Termination of the listing of the existing fund AMIRE ISIN ZAE000254595||Tuesday, 29 June 2021|
The participatory units being issued pursuant to this Supplement are not eligible for sale in any other jurisdiction in which trading in the participatory units would be illegal. The participatory units have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended, and trading in the participatory units has not been approved by the U.S. Commodity Futures Trading Commission under the U.S. Commodity Exchange Act. The participatory units may not be offered, sold or delivered within the United States or to U.S. persons, nor may any U.S. person at any time trade or maintain a position in the participatory units.
15 April 2021