Johannesburg-based private equity real estate firm International Housing Solutions (IHS) is planning to make its first investments outside of South Africa in a bid to tap into a “residential housing boom.” The firm announced that it would expand its investment remit to include Botswana, Ghana, Mauritius, Namibia and Zambia and these countries should form part of the investment thesis for its second fund.
As PERE revealed last year, IHS is bringing to market a sequel fund to its ZAR1.9 billion (€167 million; $219 million) South African Workforce Housing Fund. The fundraising target for the second fund was expected to be approximately $360 million, reflecting approximately 50 percent more equity than the maiden vehicle.
For these five new markets, IHS said it would focus once again on the affordable housing segment, which it regards as “increasingly investor-ready.” Soula Proxenos, managing partner at HIS, said in the announcement: “The decision for the second fund to target the above countries follows extensive research into the opportunities for the affordable housing sector in Africa. We sought to identify countries with stable democracies, growing economies, strong property rights and legal systems, coupled with a high need for affordable residential accommodation and low levels of corruption.”
IHS said it had confidence to expand its remit after investing its South African Workforce Housing Fund in less than five years into 32 housing projects in South Africa, which it said were worth a combined total of more than ZAR8.1 billion today.
Proxenos said the firm would continue to target Africa’s “emerging middle class,” describing them as people who otherwise are not able to step onto the housing ladder and who were not likely to benefit from already overstretched government budgets. “We have built up a formidable arsenal of knowledge and experience in the affordable housing market and are rearing to implement the strategies that have delivered such value for South Africa and her people, as well as our investors, in selected countries in sub-Saharan Africa.”
The expansion by IHS comes as institutional investor support for sub-Saharan strategies is on the increase as evidenced by two capital-raisings by other firms in 2012. In October, Actis, the pan-emerging markets private equity firm, held a final closing for its Actis Africa Real Estate 2 fund on $278 million, exceeding its $250 million target. In August, RMB Westport, a joint venture between Johannesburg-based Rand Merchant Bank and property company Westport Property Group, held a final closing of $250 million for its first fund.