The Pan African Housing Fund — a private equity fund for housing projects in eastern and southern Africa — closed at $41.5 million in December 2012.

The money was largely raised from a pool of African and European development finance institutions, and fund raising will continue in 2013, with a target of $100 million.

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The fund, sponsored by Shelter Afrique, a Pan-African financier of housing and related infrastructure projects and managed by fund management company Phatisa, provides risk capital to project developers with a success record in managing housing projects. It also helps developers acquire news skills and techniques of developing and managing such projects.

The fund’s focus is on middle and lower middle income residential developments and mixed use housing that combine residential and commercial units.

It targets clients in Kenya, Uganda, Rwanda, Tanzania, Mozambique and Zambia. and invests primarily in major urban areas mitigating environmental, social and governance risks.

Housing shortage

The East Africa Community members states for instance, require at least five million housing units annually to meet current demand, but funding shortage has restricted the ability of governments and the private sector to provide these units. The fund only considers transactions where it has the capability to execute and manage all risk aspects of the investment.

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Fund managers Phatisa said they will seek to meet the interests of the fund and the development partners through the correct selection of projects, the monitoring of deals, transparent corporate governance and the optimum exit of each investment.

Strategic investment

“Shelter Afrique is proud of the first closing of fund which is the first private equity fund dedicated to housing development in Africa. It will fill a gap for risk capital, which is the scarcest financial resource and will improve the corporate governance in the sector. This is a key strategic investment toward improving the supply of affordable housing,” said Shelter Afrique managing director Alassane Ba.

“The Phatisa team is confident that the commercial success of this new African property fund will meet the expectations of both the fund’s multi-national investors and the potential Eastern and Southern African homeowners who will benefit from the fund’s development,” said Phatisa’s Eton Price.

“In addition to financial success, the Phatisa team also recognises the role of good housing in improving social cohesion and believes that the fund will provide the occupants with an opportunity to advance their lives and well being,” he added.