The U.S.-based Overseas Private Investment Corp.’s board has approved up to $100 million in financing for an investment fund it said aims to produce “quality” commercial real estate in sub-Saharan Africa, an area where business is growing but office-space investment lags.
The lack of retail and office space in East and West Africa is constraining business growth in both areas across a continent that is rapidly becoming more urban, according to OPIC.
The Actis African Real Estate Fund 2 LP, which has a target capitalization of $250 million, will invest mostly in so-called greenfield property developments in high-growth markets in both parts of Africa. (Greenfield developments generally involve real estate transitioning from rural and urban use.) The fund will focus on the two aforementioned underserved property sectors as well as some residential and mixed-use development.
OPIC said it anticipates the fund could produce the first international-standard retail mall or Grade A office building in the targeted markets. Target countries include Ghana, Kenya, Nigeria, Tanzania, Uganda and Zambia.
The fund will follow Actis’ practice of aiming to benefit from strategies where it takes controlling stakes in its investments to manage the development process and generate returns. It uses a process involving an initial purchase of land rights and deal structuring, and finally, securing project-level finance.
