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International Housing Solutions eyes $250m South Africa fund debut

The joint venture between Baltimore-based Municipal Mortgage & Equity and a Dublin-based syndicate of private investors is poised to close on its first South Africa housing fund. It is already eying a bigger second vehicle to invest on a pan-African basis.

A US-Irish joint venture company is aiming to invest in residential projects targeting South Africa’s working class through a $250 million opportunity fund.

International Housing Solutions, a joint venture between Baltimore-based Municipal Mortgage & Equity and a Dublin-based group of private investors, is expected to hold a final close for its South Africa Workforce Housing Fund later this year, having already raised $225 million in equity from four limited partners including the Development Bank of South Africa.

According to Soula Proxenos, managing director at IHS, the fund will close after a fifth and final LP has been secured. The fund will target a return of more than 20 percent and will run for 10 years.

Proxenos told PERE that the fund would focus on partnering local developers on projects from the development stage to schemes already completed and ready for sale or leasing. She said that 25 percent of the equity in the fund had already been committed to projects principally around Gauteng and Pretoria and the Northern Cape region of South Africa. The fund will invest in the rest of the country in future years.

She said that one of the reasons for investing heavily in South Africa’s housing sector was the increased demand for domestic commodities from countries such as China, which, she said, would lead to increased workforces and subsequently increased housing demand. “As China continues to grow, those entities or countries that are rich in commodities are going to prosper,” Proxenos said.

She added that once the fund has become 85 percent committed, a second, pan-African vehicle would be launched and would likely target up to $400 million in equity.

IHS, which also runs a UK housing fund, set up an office in Johannesburg in 2005. The company also has offices in Cape Town, London, Baltimore and Boston.