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Novare hauls $130m for second Africa property fund

The Cape Town-based real estate fund manager ultimately wants to coral $250 million for investments across Sub-Saharan Africa ex-South Africa.

Cape Town-based property fund manager Novare Equity Partners has secured capital commitments of $130 million for its Africa opportunity real estate fund, and is expecting to hold a first close on around $150 million by the end of the month, PERE can reveal.

After just four months in market, Novare Africa Property Fund II has received capital commitments primarily from South African pension funds and the firm is aiming to hold a $250 million final close on Fund II by September 30, 2015.

Novare chief investment officer Pierre Groenewald said following the first closing, the firm would market the fund to international investors and that ultimately it should have about half of its capital committed by non-African sources.

Novare’s first fund attracted $81 million from domestic investors in 2010 and  is now fully invested in both developments and completed properties such as the Grand Towers Abuja Mall in the Nigerian capital Abuja.

For the second vehicle, Novare is expected to follow the strategy of its predecessor fund, focusing on commercial properties in sub-Saharan Africa excluding South Africa. The first fund had a leaning toward retail, but Groenewald said that Fund II can look more at office and mixed-use properties.

“The African continent has a severe lack of modern retail and commercial space, even though populations and average income are both growing,” he said. “Novare hopes to tap into this new market.”

Fund II is mandated to develop its projects, though Groenewald noted it is not precluded from buying old buildings and refurbishing them. Like Fund I, the second fund will target returns in excess of 25 percent net of fees.

Recently, several other African private equity real estate firms have been gaining traction with investors. Most recently, venture capital firm Laurasia Capital Management backed a $200 million private equity real estate firm aiming to partner with corporations looking to conform with South Africa’s black empowerment legislation.