Financial services group Sanlam is due to launch its sub-Saharan Africa Real Estate Fund at the end of next month, and intends to list it on the Stock Exchange of Mauritius.
The fund, which forms part of Sanlam’s growth strategy into Africa and was initially intended to be launched last month, excludes South African real estate.
Sanlam Investments CEO Johan van der Merwe said on Monday the fund "aims to take advantage of the favourable supply and demand imbalance for quality real estate across the subcontinent, as well as its strengthening demographics and resultant return characteristics".
Sanlam expects to grow the portfolio to more than $500m over the medium term, with the bulk of initial investors expected from the US and southern Africa. The group plans to close the initial capital-raising process on March 31, with the target audience being large institutions in the savings industry.
Mr van der Merwe said while most of the developed world "is struggling to find yield", Africa had seven of the top 10 growing economies in the world, creating an opportunity for Sanlam to provide the investor community "with a suite of products that facilitates participation in these markets".
Sanlam Properties CEO Thomas Reilly said "sophisticated investors" had struggled to find an internationally acceptable product to access the growing African market.
Mr Reilly said while its holding in the Accra Mall in Ghana was the fund’s only property, "we have been able to secure a strong pipeline of select assets with attractive returns". The fund would not develop property but would acquire existing income-earning assets in countries where Sanlam had a footprint, including various West and East African countries, as well as Zambia and Mozambique.
Mr Reilly said the group intended listing the fund from inception on the Stock Exchange of Mauritius "and will target double-digit US dollar investor returns". While a JSE listing in future was not completely off the cards, it was not a focus, he said.
Stanlib head of listed property funds Keillen Ndlovu said last month the focus of local funds was shifting to the rest of the continent where investments were gaining momentum. "Several South African property companies, listed and unlisted, are targeting countries such as Nigeria, Ghana, Kenya, Angola, Mozambique, Zambia and Mauritius."
Meanwhile, Resilient Property Income Fund has committed R600m towards Resilient Africa — an initiative with Standard Bank and Shoprite that intends focusing exclusively on Nigeria.
