SA's Growthpoint launches $90m pan-African real estate fund with Investec and IFC

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Growthpoint CEO Norbert Sasse said we needed the right partners and expertise to create a powerful platform for pan-African property investment. Growthpoint CEO Norbert Sasse said we needed the right partners and expertise to create a powerful platform for pan-African property investment.

South Africa’s largest property fund, Growthpoint Properties is investing alongside Investec Asset Management, the global investment management firm, partnered by the International Finance Corporation (IFC) to launch a pan-African investment strategy.

Delta Africa Property Fund, a Reit listed on the Johannesburg Stock Exchange, is also scouting for African investment deals. 

Growthpoint has entered a 50/50 joint venture with global investment management firm Investec Asset Management to form a new management business, which will establish and grow a significant diversified pan-African (excluding South Africa) third-party institutional real estate investment vehicle.

In addition to its 50% direct stake in the manager, Growthpoint will invest an initial US$50 million into the vehicle, with IFC also supporting it with a US$40 million investment as an anchor investor.

IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector in developing countries.

The US$90 million commitment from Growthpoint and IFC as anchor investors is part of a targeted US$500 million that will be raised for this third-party institutional investment vehicle.

The venture will not be open to public investors. However, the aim is to grow it to an optimal size for a possible stock exchange listing in the next five to seven years.

Norbert Sasse, CEO of Growthpoint Properties, comments: “Our African strategy has been in the making for some time. We needed the right partners and expertise to create a powerful platform for pan-African property investment.”

Growthpoint owns and manages a diversified portfolio of 471 properties in South Africa, 53 properties in Australia through its investment in Growthpoint Properties Australia (GOZ) and a 50% interest in the properties at V&A Waterfront, Cape Town. Growthpoint has consolidated property assets valued over R100 billion.

John Green, Head, Global Client Group at Investec Asset Management, comments: “We believe the African real estate markets are well positioned for a long-term growth phase given the significant supply deficit across the continent.”

The new venture’s dedicated senior management team has a collective 30 years of experience in real estate and investment on the African continent and will be led by Thomas Reilly, the previous CEO of Sanlam’s Africa property fund business.

The new pan-African real estate vehicle will initially target investment in select African economies in East, West and Southern Africa. These include Namibia, Botswana, Mozambique, Zambia, Uganda, Tanzania, Kenya, Nigeria, Ghana and Morocco, among others, with opportunity-driven investment.

The vehicle will have a bias towards buying existing assets as 80% of its real estate portfolio will consist of income-producing assets and 20% will be earmarked for development of new assets.

Analysts expect Growthpoint to gain from the venture in the longer term.

"This is small fry for Growthpoint — a $50m investment, they have individual buildings worth more — but it may be a toe in the water. African investments take time. They are targeting a listing in five to seven years which suggests this," Evan Robins of Old Mutual Investment Group said.

"We view this as a long-term story. African economies are going through short-term challenges at present but we believe that the continent has pretty amazing long-term prospects. It is a good move for Growthpoint to diversify its nonSouth African exposure," Keillen Ndlovu, head of listed property funds at Stanlib said.

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