The Eskom Pension and Provident Fund (EPPF) has invested R100 million in the second fund of global private equity funder International Housing Solutions (IHS) for the development of affordable housing units.
The investment follows the commitment of more than R500m to IHS’s second fund by the National Housing Finance Corporation and the International Finance Corporation, a member of the World Bank.
Sibusiso Luthuli, the EPPF’s chief executive, said yesterday that it was cognisant of the shortage of affordable housing in the country and the fact that the government alone could not address the backlog.
Current estimates were that 7.5 million South Africans lived in inadequate housing, placing the housing backlog at an estimated 2.1 million to 2.5 million units, Luthuli said at the signing of an agreement between the EPPF and IHS.
Luthuli said the affordable housing sector had shown its ability to improve the social circumstances of thousands of South Africans, as well as providing superior returns to investors in this sector.
He said the EPPF investment was in line with its development impact policy, which prioritised investments into affordable housing initiatives to maximise the opportunity of obtaining a social dividend on top of the financial benefit.
Luthuli was unable to quantify the return the EPPF would get on projects like this, but indicated it expected a return that at least matched the consumer price index.
“We at least want to get our money back. But IHS with its first fund gave a very healthy return on funds,” he said.
Luthuli said the EPPF was proud to partner in this endeavour with IHS, which had a proven track record of enabling the building of quality communities while maintaining the highest level of oversight and financial due diligence.
Soula Proxenos, the managing partner of IHS, said the latest investment in the fund by Eskom would further strengthen the sector and the economy because of the opportunity it would provide to thousands of families.
Proxenos said the company’s first fund, the SA Workforce Housing Fund, enabled the financing and development of more than 28 000 homes with a combined total value of more than R8.6 billion throughout the country and it was hoping to achieve this “and more” with the second fund.
She said an analysis of the IHS’s first fund by the economics unit at the University of Cape Town estimated that in the 10-year life of the fund it would create 100 000 man years of work.
“Our contribution to helping create employment is very important,” she said.
Proxenos said the affordable housing market catered for households with an income between R3 500 and R18 000 a month, with people in this segment earning too much to qualify for the government’s low-cost subsidised housing and too little to afford the cheapest standard private sector houses or to qualify for a mortgage bond.
Even though they were in a position to buy their own homes, there was a shortage of housing stock, she said.