Britam's Sh10 billion property fund will be set up in "tax-efficient" Mauritius in early 2013, group managing director Benson Wairegi said on Thursday.
Wairegi told the Star that Britam will inject Sh1 billion in seed capital and invite high net-worth investors to contribute the rest of the funds.
"Mauritius is an off-shore financial centre and a tax-efficient jurisdiction. Any investor would want to put their money in the most tax-efficient place," he said.
Mauritius offers low-tax incentives to non-resident offshore companies, making it an attractive destination for holding and structuring global investments.
"We are still doing the background work and getting the legal documentation together for the fund's structure," he said, adding that these will hopefully be out of the way by January or February.
The property fund will be managed by British-American Asset Management, a subsidiary. The fund will focus on property development, both for rental and outright sale.
"We will continue developing strategic alliances in the housing sector to enable more Kenyans access affordable housing," Britam Investments says in its 2011 annual report.
The firm is scaling up its real estate investments, with one of its objectives for last year's listing through an IPO at the NSE being to raise capital for property development. The IPO was however undersubscribed, only raising Sh3.5 billion against a targeted Sh5.8 billion.
"Building on past property development successes, we plan to invest on a much broader scale in land and large scale property development, including both commercial office buildings and residential housing," the firm said.
Already secured in its investment portfolio is prime land in Nairobi's Kilimani area "ripe for development."
On Thursday, it broke ground for a 30-storey office tower in Upper Hill that will be completed in three years. The total investment towards the project is estimated at Sh5 billion. The project, sitting on 1.5 acres, also includes a 10-storey parkade.
The project will be financed using pension funds from Britam Insurance's life funds as well as funds from the parent company, according to Wairegi.
"We have a very big balance sheet currently standing at Sh34 billion," he said.
The firm is targeting multi-national firms, diplomatic missions and state agencies to take up the rental space. It will also lease the 1,000 parking slots that will be created.
Wairegi said the calculated initial rate of return for the investment is "30 per cent plus".