IHS holds first close on Fund II

Johannesburg-based private equity real estate firm International Housing Solutions (IHS) has held a first close on its second real estate fund, IHS Fund II. The firm has brought in R1.5 billion ($136.94 million; €105.9 million) for the fund, for which it will target opportunities in sub-Saharan Africa’s affordable housing market.

A year ago, PERE reported that Fund II had attracted its initial commitments, bringing in $63 million in equity from the World Bank’s International Finance Corporation and the South Africa National Housing Finance Corporation. The additional capital raised for the vehicle’s first close includes commitments from the Overseas Private Investment Corporation, WBD Investment Holdings, Global Environmental Facility and the Eskom Pension and Provident Fund.

“There has been a great deal of interest in this historically under-focused asset class from both South African and international investors,” noted managing partner Soula Proxenos in a statement from IHS. “Our investors are particularly attracted to this asset class as they want to achieve superior returns and help improve the social circumstances and make a significant positive impact on the lives of thousands of people. “

The firm expects to raise more than R3 billion for the vehicle, according to Proxenos. Investment for Fund II will be focused on the development of new single-family homes, multifamily properties and student housing.

Fund II will consist of two sleeves: one for investments in the Republic of South Africa, and one for investments in other sub-Saharan African countries such as Ghana, Zambia, Botswana, Namibia, and Mauritius.  Proxenos told PERE that the firm will target “gap housing,” a sector between government-issued housing and the traditional housing market, which is out of reach for the majority of South Africans. Through the vehicle, IHS hopes to help offset the 600,000-unit housing deficit for low- and middle-income housing in South Africa.

IHS’s debut fund, the Southern Africa Workforce Housing Fund, closed on $230 million in equity in 2009. The vehicle was invested in 34 projects with 18 different developers which built 28,000 housing units with a combined total value of R8.6 billion.