GIC makes Africa play backing two biggest firms – Exclusive

The government of Singapore's sovereign wealth fund, GIC Private, has taken its first major step towards building an African real estate portfolio after backing the region’s two biggest private equity real estate firms, PERE can reveal.

The state fund, whose real estate division is widely considered a bellwether for other sovereign wealth funds, is understood to have committed more than $100 million across two separate commitments to the latest development funds of real estate investment management firms Actis and RMB Westport.

Neither GIC, nor the firms, would comment, but it is understood that the investments in Actis Real Estate Fund 3 and the RMB Westport Real Estate Development Fund II signal the start of a meaningful commitment by the state fund to a region where it has no real estate exposure and little exposure in other asset classes either.

Indeed, according to GIC’s annual report, 43 percent of its overall assets are in the US, 25 percent are in Europe, 30 percent are in Asia and 2 percent in Australasia.

It said in the report 7 percent of its total assets are in real estate and these are split 52 percent Asia, 28 percent US and 20 percent Europe.

GIC has no offices in Africa either, which is one of the reasons why it has chosen to invest indirectly via Actis and RMB Westport. It has 10 offices around the world and regularly invests in real estate directly, either alone, via joint ventures or clubs or even via taking positions in real estate companies.

A commitment by such a revered and established institutional real estate investor as GIC will be regarded by the international private real estate markets as something of a milestone in the asset class’ evolution in Africa.

Although the majority of institutional investment in Africa has come via Sub-Saharan development strategies, taking in developments in countries including Nigeria, Ghana and Kenya, the number of firms offering these strategies has multiplied over the last few years. Indeed, according to PERE’s Research & Analytics, approximately $1.5 billion was raised for Sub-Saharan Africa by about 10 managers since the global financial crisis. However, much of that was raised by Actis and RMB Westport and in the last couple of years.

Their funds have progressively become larger too.

Actis is aiming to raise as much as $400 million for its third fund, while RMB Westport is seeking $450 million for its second.

Including GIC’s commitment, both have already eaten into their targets with the former understood to be beyond $100 million and the later beyond $240 million.

One person with knowledge of the situation said GIC’s commitment to both firms was necessary in order for the state fund to achieve appropriate scale, as, despite being the largest funds in the market, neither would be large enough to accommodate the investor without it taking up too large a share.

He said: “To make the geography worthwhile, they had to commit a sizeable amount of money. The group needs to make a sizeable commitment to the geography. They need to invest in the two funds in order to do that.”