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OPIC approves $100m in financing for Actis fund

The US government’s development finance agency will help to leverage investments by Actis’ second African real estate fund, which will develop commercial properties in the sub-Saharan region.

The Overseas Private Investment Corporation (OPIC), the US government’s development finance institution, has approved up to $100 million in financing to London-based private equity firm Actis for its Actis Africa Real Estate Fund 2. The agency’s involvement in investment funds typically involves providing financing to support additional investment, usually at a 1:2 debt-to-equity ratio.

The Actis fund, which is targeting $250 million in commitments, primarily will invest in real estate developments in high-growth markets in East and West Africa, which are considered among the fastest-urbanising areas in the world but significantly underinvested in commercial real estate. The vehicle will focus on opportunities in the retail and office sectors, as well as some residential and mixed-use projects, and target the countries of Ghana, Kenya, Nigeria, Tanzania, Uganda and Zambia. In many cases, the fund’s investments will produce the first Class A-quality shopping mall or office building in the targeted markets.

“The lack of retail and office space in East and West Africa is inhibiting the growth of businesses in both regions – a problem exacerbated by rapid urbanisation across the continent,” said OPIC president and chief executive Elizabeth Littlefield in a statement. “By introducing the expertise and skills necessary to make prime real estate development for growing businesses commercially sustainable, Actis will help spur economic growth on the continent.”

While OPIC’s primary focus currently is renewable resources, the agency has targeted the growth of housing development and housing finance in emerging markets since the mid-2000s. Since 2007, OPIC has provided financing to real estate investment funds such as Capital Alliance Property Investment and the South Africa Workforce Housing Fund, both of which are investing in Africa, and the Alsis Latin America Fund and Paladin Realty Latin America Investors funds II and III.
 
Actis, which invests exclusively in Africa, Asia and Latin America, was established in 2004 after spinning out from CDC, the UK government’s development finance arm. In 2006, it raised $150 million for Actis Africa Real Estate Fund, which is now fully invested. The firm currently has more than $5 billion in assets under management worldwide.