The Finance Ghost: Much ado about MAS — Rare case of two-headed shareholder activism

If you crave a boring life, then putting your name down to be a non-executive director at MAS probably wouldn’t be wise. The JSE-listed Eastern European property fund finds itself in the middle of a battle that includes at least two distinct groups of shareholders. What makes this particularly interesting is that we aren’t even seeing those groups fighting with each other. Instead, this can best be described as two-headed shareholder activism, with both of those groupings fighting with the board directly – at least for the time being.

If that sounds rather frightening, that’s because it is. To help the company navigate this mess, the board of MAS has appointed Investec as its corporate adviser. The official line is that the board wants to appoint an adviser to help it with any future offers that might come through for the company, but personally I think it’s more a case of just wanting to get experienced advisers in the room as quickly as possible.

But how did we get to this point?

Gradually, then suddenly

The seeds for this mess were planted a couple of years ago in 2023,  when MAS suspended its dividend based on a concern about having enough cash available for bond maturities in years to come. If every property fund behaved this way, then none of them would ever pay a dividend, as the assumption is always that debt will continue to be available at reasonable rates for these companies. The MAS narrative was that because of its credit rating and the prevailing environment, it might not be possible to refinance the bonds at sufficiently low rates.

As time went on, MAS regained the trust of institutional investors, who backed this story and took a view on underlying net asset value growth rather than the yield (or lack thereof). By the end of 2024, the share price had recovered fully from the drawdown of roughly 35% in late 2023, generating great returns for punters along the way. The volatility in 2025 has been staggering, with the stock dropping from R23.50 at the start of the year to below R17.00 in the April flash crash. It’s now back to where it started the year. Again, those who timed their buys correctly have done incredibly well here. But those who bought in just before the September 2023 crash have essentially made nothing.

Prime Kapital is frustrated by this situation, as it sees the MAS shares as being undervalued. When shares are trading at a discount to the value of the underlying assets, the voices calling for a disposal of assets and return of capital to shareholders become louder. And thanks to the terms of the joint venture agreement, Prime Kapital has the bite to match the bark.

Therein lies the reason why the second grouping of shareholders has formed: MAS has broken the trust of the South African institutional investor community once more. And this time, I suspect that it’s terminal.

Boiling point

You see, with Prime Kapital taking an aggressive approach of using the cash in the joint venture between the companies as a bargaining tool in an effort to get the MAS board to agree to a value unlock strategy (a sale of properties and return of capital to shareholders), local institutional investors were left scratching their heads about the terms of that joint venture. MAS needed to respond to this by releasing a summary of the terms of the joint venture with Prime Kapital. Unfortunately, this summary quickly led to far more questions than answers – and many of those questions have teeth.

A group of institutional investors in South Africa have come together for the purposes of trying to get answers. They’ve demanded a shareholder meeting to appoint four new non-executive directors to the board, including property industry stalwart Des de Beer. They’ve also sent a very angry letter with serious allegations about disclosure shortcomings related to the joint venture agreement. 

I must be honest: I don’t blame them at all. I was amazed that Prime Kapital had the ability to block the cash being paid out of the joint venture, and that’s not even the worst of it. If the allegations are correct, then it appears as though key economic elements of the joint venture agreement weren’t disclosed properly to the market.

And amid all this noise, the shareholder meeting that was called by Prime Kapital to give an advisory vote to the board regarding the proposed asset disposal strategy and special dividends didn’t exactly go the way they had hoped. If you include the votes by Prime Kapital, it’s approximately a 50–50 split. But if you exclude those votes, thereby isolating the rest of the shareholders, you find that holders of 89% of shares voted against the resolutions.

So, where does this leave us?

MAS will need to have a shareholders meeting to deal with the proposed appointment of non-executive directors, as well as the potential removal of two directors whom the institutional investors feel are conflicted or could reasonably be perceived to be conflicted. 

Prime Kapital will need to tread carefully here, as its approach of wanting to be seen as driving a value unlock strategy (rather than just focusing on its own interests) is already being viewed with much scepticism by most other investors, so a move to block reasonable non-executive director appointments won’t win it any friends. 

Remember, it has already hinted at the terms of a cheeky offer to shareholders and now there are concerns around disclosure as well, so the perception of its approach isn’t exactly positive at the moment.

To add further spice to this utterly delightful corporate finance conundrum, we have Hyprop waiting in the wings with a potential offer for MAS. This is after Hyprop shareholders were happy to support a capital raise that gives Hyprop the firepower to put a number on the table.

There are many moving parts here and there are big numbers on the line. In this blend of high-stakes poker and chess, the advisers really make a difference. We aren’t even close to seeing the end of this story just yet. DM