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Grosvenor plots first Africa investments as LP

The London-based firm, better known for its third-party investment management division is planning to invest up to £250 million into Africa funds as a passive investor.

Grosvenor, the London-based property investment and fund management business, is to make its first investments in Africa.

According to its annual review for 2013 published today, as part of its investment strategy for between 2014 and 2016 the firm has decided to invest in the real estate markets of Sub Saharan Africa as an “initial priority” of its indirect division.

The division has been mandated to invest up to 5 percent of the group’s capital, or £250 million (€304 million; $420 million) over the long term into cities in the region.

These investments are expected to take the form of passive, limited partner commitments to funds managed by third-parties.

The division’s finance director Tim Budden told PERE that in the “medium term” it would invest 2 percent, or $100 million into African opportunities, predominantly via commitments of £20 million to £30 million.

He said: “We have already started making enquiries and are planning a trip as a team later this year to spend time in the region. We’re already talking to some of the fund managers. We’re making headway.”

“The demographics are compelling. This region has a rapidly growing, young population, rising consumer spending and middle class as well as rapid urbanization. Those signs are fundamental and fit with our strategy of backing cities,” he added.

Budden said the decision for Grosvenor’s indirect division to allocate capital to Africa for the first time was taken last year.

Grosvenor’s indirect division is to enable the firm to diversify its property investment portfolio and achieve returns by exposure to sectors, countries and specialist managers which its direct property activities do not provide. 

According to the review, the division currently is responsible for approximately 30 percent of the firm’s capital. At the end of 2013, it had £532.1 million invested. About half of its investments are the co-investments made Grosvenor in the funds managed by its fund management division, Grosvenor Fund Management (GFM). It also is invested in a retail property business in Europe called Sonae Sierra and logistics businesses in the UK and Australia.