9 October 2014
Africa’s largest lender by market value, FirstRand, is planning to raise US$500- million to invest in real estate across Africa.
The South African financial services provider is targeting prime real estate markets particularly in West and Southern Africa and hopes to raise the money from Swiss, Belgian, Dutch, Scandinavian and Luxembourg investors.
Speaking to Bloomberg, CEO Boshoff Grobler of Ashburton Investments, the asset- management arm of Johannesburg-based FirstRand, says they will proceed with the investment when FirstRand’s existing US$250 million African property fund is 75% invested early next year.
“Investors are looking for growth in their portfolios. The markets where investors are finding growth has pushed them into Africa,” says Grobler, adding that the planned property fund will offer greater access to developments in Angola, Africa’s second- biggest oil producer, and further grow FirstRand’s footprint in Ghana and Nigeria.
In 2012, FirstRand managed to raise US$250-million to develop properties in West Africa to supply the strong demand for high-grade retail and commercial property in the region. Disclosing FirstRand’s plans at that time, Michael O’Malley, director of Rand Merchant Bank Westport, another division of FirstRand, said Nigeria, Ghana and Angola have been earmarked as key jurisdictions in which to develop retail and commercial property.
“Over the past decade, African economic output has more than tripled, which is one of the many reasons we believe that Africa today holds the greatest overall investment potential for all frontier markets globally.’
O’Malley had said the discovery of oil in Ghana would likely lead to a further increase in investor interest and subsequent demand for office and industrial space. This, together with an increasing proportion of Africa’s population moving into urban areas as economic growth quickens, would lead to more property developments mainly in major cities including Accra, Abuja and Luanda, the capitals of Ghana, Nigeria and Angola respectively.
RMB Westport have in the past been involved in some projects in Africa including Icon House and Accra Financial Centre, an A-grade buildings in Ghana; Ikeja City Mall, the largest shopping mall in Nigeria; Osapa Retail Phase I and Project Wings office and retail properties also in Nigeria; and the Junction Shopping Centre, a retail property located in Accra‚ Ghana.
Ashburton Investments is also starting a private equity fund of as much as R750- million, focused mainly on South Africa. The asset manager, which has offices in Johannesburg, Jersey, London, Dubai, Nairobi, Cape Town and Durban, was created last year when FirstRand consolidated investment and consumer units.
FirstRand CEO, Sizwe Nxasana, says Ashburton Investments is attracting more clients from Africa’s growing middle class.
“Increasingly as Africa sees the growth of people into the middle and upper classes, they are going to need specialist investment management companies such as Ashburton.
“Most of the growth happening in South Africa is now driven by the new emerging black middle class. The same applies to other countries,” Nxasana says.