Actis invests in African shopping malls

By Bloomberg Time of article published Jun 14, 2013

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Kamlesh Bhuckory

ACTIS would lead investment of as much as $1.5 billion (R15bn) in African commercial property to meet rising demand from international companies targeting a growing middle class of consumers, the UK-based private equity firm said on Tuesday.

“We are seeing a shift in interest from South African brands to European retailers” seeking opportunities in fast- growing economies such as Nigeria, Ghana and Kenya, Kevin Teeroovengadum, the director of Actis’s sub-Saharan Africa real estate unit, said.

“They want to tap into the emerging middle class.”

Actis, based in London, was planning to invest in projects including shopping centres, office towers and industrial parks that would come to fruition over the next five years, Teeroovengadum said.

The company would use the proceeds of its second African property fund that raised $280 million in October last year. The rest of the investment would come from commercial partners and loans.

Africa’s economy, excluding Libya and Somalia, is forecast to expand 4.5 percent this year and 5.2 percent next year amid a rise in oil and mining projects and direct investment from foreign companies, the African Development Bank’s annual outlook shows. Nigeria grew 6.6 percent in the first quarter while South Africa expanded by an annualised 0.9 percent.

Actis has raised about $1.4bn across seven Africa funds since 2003, Bloomberg data show. The company is also pursuing deals in South America and south-east Asia in sectors including energy and technology.

Africa has the youngest and fastest-growing population, a McKinsey report said in 2010.

Household expenditure on the continent was forecast to expand 63 percent to $1.4 trillion by 2020, the report said.

Shantayanan Devarajan, the World Bank’s chief economist for Africa, said in May last year that “this is a very good time for retailers to get a foothold in Africa.”

Actis had already invested the proceeds of an initial $155m fund in malls and office buildings in Ghana, Nigeria, Kenya, Botswana and Mauritius, Teeroovengadum said.

The company has partnered with Mauritian investment company GML to invest in Indian Ocean Real Estate, which is developing a $1.5bn town in the island nation.

“We have leapfrogged to shopping centres of 25 000m² from existing small shops” in Nigeria and Ghana, Teeroovengadum said.

“The idea was when you go into Africa, you benefit from middle-class growth.”

JSE-listed grocery and clothing retailers Shoprite, Mr Price and Truworths already had outlets in Actis’s Nigerian shopping centres, Teeroovengadum said.

Spanish fashion chain Zara, owned by Inditex, and Arcadia Group’s Topshop are among European chains with African expansion plans.

The company was also adding industrial and logistics parks to its African property portfolio in response to a “complete lack” of that kind of infrastructure, Teeroovengadum said.

“These opportunities will happen in key markets such as Mozambique, Zambia, Ghana.” – Bloomberg

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