Recently listed International Hotel Group hasn’t got off to a good start, with the rand’s collapse sinking a major acquisition. While it’s backed by the mighty Redefine property group, last year’s inward listing on AltX appears to have brought in rather more fearful investors, calling into question the firm’s strategy of raising capital from South Africans to fund deals in the UK and Europe. BT asked CEO Helder Pereira . . . What happened?There's uncertainty in global markets, there's clearly uncertainty on the currency, and with the nervousness that's prevailing, people don't really want to commit large sums of capital, especially when you're going in on rands to hard currency. They want to wait until it finds a stable place.The portfolio we were looking at acquiring was probably one of the best I've come across in my eight years in the UK, but unfortunately the timing wasn't on our side. But, you know, other deals will come up and let's hope markets and the rand stabilise to allow people confidence to invest in offshore property. We look at hard currency returns and if countries like South Africa want to take a bet on it, take it as a rand hedge, that's their call.We don't go to any market unless we're getting best-practice, hard-currency returns.story_article_left1But does this not negate the whole strategy of listing on the JSE - and getting South Africans to invest their rands in hard currency assets?We have a history of connectivity, me personally and Redefine itself, with the South African market, so that was one rationale to do the inward listing, for South Africans to avail themselves of property investments offshore without utilising their forex allocation, so that was the rationale to go on the JSE.It wasn't to go on the JSE as purely a rand-hedge investment.It clearly will be a rand-hedge investment if you look at the long term but it's got to be able to stand on its own right as a quality international investment.Did you not have enough [funds] already from your debut?Being a property income fund we can't hold onto cash, so what we have to do is wait for the investment to come, wait for the opportunities to come, then go to the market.If we were talking relatively small deals we won't normally have to do that, but a deal that size, we would have had to sign and commit to the seller, on a strict schedule, that we would go out and raise the equity.And if the rand stays as weak as it is now, all year, then what?Well, if the rand does stay as it is, there will be more certainty in investors' minds that that is where the rand is going to stay. The problem at the moment is that they have no idea where it's going to settle. The issue for investors is what is the correct price I should be converting my rands at?Secondly, we may not need to go back to the market. This was a huge deal. We'll go back with smaller deals, which is how we built the company to where it is at the moment. This was just a great opportunity and I think in normal times we would have got [the cash] because we don't think the South African market has been nervous to invest in offshore property assets, so the problem wasn't the asset, just the uncertainty in the market. But the future is still good; we're acquiring three properties in the next three weeks but the transaction is much smaller in nature.Are you only keen to raise equity capital or could you have got debt to fund this deal?We raised debt, we had it in place, the debt wasn't an issue. We managed to raise it quite quickly because we had very tight deadlines set by the sellers. That wasn't the issue.So did you approach shareholders to gauge their sentiment? Did you have a firm understanding that they wouldn't be keen?No, our current shareholders backed it totally, they were behind it. They were going to underwrite a significant portion of the debt and they felt the South African market would be very excited about it. And then of course everything happened in the global markets and the rand, so when we went out to the [wider] investor community in South Africa they weren't sure. All the investors were happy about the company but they weren't prepared to invest where the rand was currently.The rand has been uncertain, if you want to call it that, for the last few years ...I suppose if you think it's going to correct by 5% or 8% then it makes a significant difference when you invest - like all investors you want to come in at the right time.You have alluded to fairly compressed yields in the UK property market - is the UK still a good place for property investors? Is it juicy enough or will you start looking elsewhere?story_article_right2There has been yield compression but it depends on what assets you're talking about. There are still good opportunities for income players, like hotel properties. We think there's lots still in the UK but we are going to start looking to the mainland. We just want to stabilise the acquisitions we've made in the last six months. We're quite keen on Amsterdam, Germany, Spain, Benelux.How many properties do you have at the moment?We have four Travelodges - one's being built plus one in development - and a Holiday Express in Dunstable. We're about to transact on another three in the next four weeks.It's not been a great start to the year for you - could it be a rough one, given the rand and the rising panic in world stock markets?It could be tough to acquire but I don't think it will be tough in the sense that we'll deliver on the yields with the properties we have. So from our current portfolio we think the year's going to be good. It could also work in our favour because if the market becomes nervous, that could reverse the yield compression, so you might find that you can actually buy at the right rate. Whether you can raise the money becomes a separate issue [laughs], but until we try we won't really know. We're certainly not going to give up, put it that way.Talevi is a BDTV presenter..