20 June 2012

East Africa: Actis Eyes Real Estate in East and West Africa

Private equity fund Actis is eyeing greenfield property developments in sub-Saharan Africa, with a focus on A-grade retail and office sectors. The fund will also invest equity in some residential and mixed-use developments in West and East Africa, and has put particular focus on Kenya, Uganda, Tanzania, Ghana, Nigeria and Zambia.

Sub-Saharan Africa is currently experiencing a shortage of modern buildings, with demand for high quality office, retail and residential properties far outstripping demand. Actis is eyeing to supply "quality commercial real estate in sub-Saharan Africa, as well as provide more efficient retail formats and broader array of housing alternatives."

It also hopes to make an impact building standards in the region through knowledge transfer in the areas of building technologies, architecture, cost consultancy and other professional skills. The fund invests in risk capital that facilitates new business development and existing company expansion and is expecting to have significant development returns.

In Kenya, Actis is in the process of starting a real estate project along Thika Road where it intends to build a business park. The development will sit on a 32-acre parcel of land, and is set to kick off before the end of the year. The PE fund will develop more than 60,000 sq. metres of mixed-use retail and commercial space and 1,000 apartment units.

Actis has in the past been involved in the development of The Junction shopping mall on Ngong Road and the Nairobi Business Park. The firm, when exiting Accra Mall where it sold its 85 per cent shareholding to South African property developer Atterbury and financial services group Sanlam, said it intends to initiate and develop real estate projects worth $0.5 billion in sub-Saharan Africa over the next three years.

The London-based PE fund is seeking a loan from the US government's development finance institution Open Private Investment Corporation of up to $100 million. The OPIC loan will amount to more than a third of the fund's total capitalisation. Actis Africa Real Estate Fund, to which the loan will be advanced, has a total capitalisation target of $250 million, with a hard capitalisation of $300 million including the proposed OPIC loan.

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