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STANLIB launches $150m Africa retail fund

The wholly-owned unit of Johannesburg-based wealth management firm Liberty Group is committing the first $50 million to the fund and expects pension funds, sovereign wealth funds and development finance institutions to commit the rest.

STANLIB, the wholly-owned unit of Liberty Group, the Johannesburg-based wealth management firm, has launched a real estate development fund focused on retail assets in selected African countries with a fundraising target of $150 million.

The unit, which manages R504 billion (€38 billion; $50.7 billion) of assets, is planning to commit $50 million of the total equity in a bid to entice institutions including pension funds, sovereign wealth funds and development finance institutions into committing the rest.

The fund launch comes at a time of increasing enthusiasm for African real estate amid a growing middle class. Towards the end of last year, private equity form Actis raised $278 million for its second sub-Saharan Africa property fund and RMB Westport, a joint venture between Johannesburg-based bank Rand Merchant Bank and property company Westport Property Group, closed on $250 million for its debut effort, also focused on markets beneath the Sahara Desert.

Similarly to STANLIB, RMB Westport seeded its fund with a sizeable coinvestment and that played a part in hauling in commitments from a large Abu Dhabi sovereign wealth fund and a Canadian pension fund.

STANLIB’s fund, which is expected to run for eight years, will have a relatively tighter initial remit to both those vehicles however, focusing primarily on retail developments in Nigeria and Kenya, two markets which have demonstrated greater consumer appetites of late.  Roberto Ferreira, the fund’s manager, said: “There is a lot of opportunity for quality retail space in areas accessible to a vibrant population that is upwardly mobile. Our philosophy is to have investments with long term returns in quality real estate in carefully chosen economically growing nodes.”

“We want to build quality, sustainable investments that stand the test of time. Our direct involvement means we can vouch for the quality of the buildings and that the income stream remains relevant over the long term,” he said.

Focusing on developing properties for South African retailers STANLIB expects to generate an IRR of 25 percent in dollar terms and a development yield of between 12 percent and 14 percent from its investments. “Africa is a good return play and provides investors with growth opportunities not seen anywhere else in the world at the moment,” Ferreira said.

No placement agent has been appointed to market the fund at this stage however STANLIB said it would consider appointing an agent at a later date.