The fund aims to invest in office and retail properties in sub-Saharan Africa to meet demand for offices from foreign direct investment and for shops from South Africa's expanding retailers.
The fund is the first "dedicated real estate fund" in which the CDC has invested. CDC used to be called the Commonwealth Development Corp. but it has been renamed the British Development Finance Institution. CDC CEO Richard Laing says that the shareholder, the UK government, requires that about 50% of its funds available are invested in sub-Saharan Africa and southeast Asia. Funds are not invested directly, instead they are invested in private equity funds which invest in emerging markets.CDC has been investing in property for the past six to 10 years and as a result they identified a demand from South African national retailers like Shoprite who are looking to expand north but are struggling to find suitable units for shops and offices.
"The Actis fund will be in a good position to do business with retailers. The retailers will be the tenants in the properties. When it comes to non-retail property, it will be for anyone who wants good commercial property," Laing says.
The CDC says there is strong, and growing, demand for quality retail, commercial, industrial and residential property in Africa, driven by GDP growth, increased foreign investment, outsourcing and--in west and central Africa--by the oil industry.
The Actis Africa Real Estate Fund also includes about four of five existing properties the CDC injected into it. These include properties in Nairobi, Kampala and Dar es Salaam, an early stage retail development in Accra, and a soon-to-be-completed retail mall in Lagos.
The fund aims to work alongside local developers in the countries in which it invests to co-develop and acquire start-up property developments off plan. It also aims to acquire and add value to existing properties held by governments, companies, individuals or institutions. This may include the "turnarounds of distressed properties", says the CDC.
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