The International Finance Corporation (IFC) is set to make an equity investment worth Sh2.96 billion ($20.9 million) in a US-owned Southern African asset manager that is developing 5,000 affordable houses in Kenya.
The IFC said in new disclosures that its equity co-investment with the Investment Housing Solutions group of companies (IHS) in the project will see it take up a maximum stake that does not exceed 20 percent in a fund set up to finance the affordable housing venture.
The fund has a target equity investment of up to €130 million ($140 million/Sh19.8 billion), sourced from various institutional investors.
Its target area is the Nairobi metropolitan area with expansion to other counties depending on demand.
A minimum of 15 percent of the funds committed capital shall, however, target areas outside of Nairobi.
“The proposed IFC investment is an equity co-investment package by IFC of up to €19.3 million (approximately $20.9 million) to invest along with IHS Kenya Green Housing Partnership LLP and IHS Kenya Green Housing SCSp (the Fund) in the development and acquisition of approximately 5,000 newly developed, resource-efficient, green affordable housing properties in Kenya,” said the IFC in is disclosures.
“The proposed IFC investment will consist of up to €10 million (approximately $10.9 million) from IFC’s own account and up to $10 million equivalent in euros (app. €9.3 million) from IFC acting as the implementing entity of the UK-IFC Market Accelerator for Green Construction Program (MAGC).”
By the end of last year, IHS had raised more than $740 million (Sh104.7 billion) since 2008 in capital that has been deployed in six multi-investor funds, one single-investor fund and listed a publicly traded REIT in Johannesburg.
IHS Kenya Green Affordable Housing Fund was launched in 2021.
The affordable housing drive in Kenya was put in place as one of the Big Four agenda items by the previous administration.
It has picked up pace over the past year after being identified as one of the key policy areas by the Kenya Kwanza administration, largely under a Public Private Partnership (PPP) model.
The push for more affordable houses in Kenya is informed by the annual housing deficit that is estimated at 200,000 units.
Expensive home loans, owing to a number of factors including the high cost of land, low levels of income and limited access to affordable long-term finance, have curtailed the development of the mortgage market in Kenya.
As a result, the government together with the World Bank, lenders and other financial institutions, teamed to form the Kenya Mortgage Refinancing Company (KMRC), which is disbursing loans to primary lenders such as banks in the form of long-term funds, with the goal of unlocking affordable home loans for Kenyans.
