13 July 2011
Financial services group Old Mutual’s investment arm has raised R9-billion for its innovative Housing Impact Fund for South Africa, which aims to help South Africans earning less than R15 000 a month to meet their housing needs.
The Fund, one of the largest of its kind ever raised in South Africa, finances the construction of “affordable” homes for sale and rent, as well as providing housing loans and rental accommodation for families and students.
It helps fill a serious gap in the market between government-provided housing and those who have access to bank finance to purchase their own homes.
It is managed by Christine Glover, an experienced low-income housing sector specialist and head of Development Impact Funds at Alternative Investments, who also manages the Financial Sector Charter Fund and other funds dedicated to making a positive impact on the country’s social and economic development.
Addressing housing challenge
Announcing the closure of the Fund last week, Rojie Kisten, head of capital raising at Old Mutual Investment Group South Africa, said: “The Housing Impact Fund has been [the group’s] response to the government’s call on the private sector to assist in finding lasting solutions to the housing challenge in the country.
“We are thrilled to be partnering with like-minded, socially conscious investors – the Public Investment Corporation, Old Mutual Life Assurance Company of SA, the Development Bank of Southern Africa and Eskom – to help ease the backlog of some 650 000 housing units in the affordable sector.
“Although much remains to be done to further improve general living conditions around the country, we believe we have established a successful model for housing investment in underdeveloped areas, as well as financing solutions for end-users, which have previously been neglected by institutional investors due to the high level of risk in this industry.”
Kisten said that the unique partnerships with developers through special purpose vehicles ensure that Old Mutual maximises the direct profit participation potential, and also mitigates direct corporate risk.
Several dozen projects under way
The Fund and its partners already have several dozen projects under way involving the construction or development of some 70 000 affordable housing units, with the ultimate target of building approximately 120 000 units in total over the life of the Fund.
“We are very excited by the progress made to date and future plans for the Fund, all of which have been made possible by both our investment and development partners spanning the public and private sectors,” added Kisten. “Such sustainable partnerships have a key role to play in South Africa’s successful development, helping to overcome the economic and social challenges we still face.”
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