Private investment firm Infraco Africa has invested $10 million into Acorn Holdings REIT in support of the company’s affordable student accommodation projects in Nairobi.
“This subscription marks our first investment into affordable housing and I am delighted to take this step with Acorn, a well-respected developer of high-quality student accommodation. As the anchor investor in the Acorn REITs, our involvement will also strengthen local capital markets to support similar infrastructure initiatives in the future,” InfraCo Africa’s CEO, Gilles Vaes said.
Infraco is an anchor investor into both the Development and Income REITs, where it is hoping its involvement will give comfort to local private sector investors, crowding in further funds from investors such as pension and mutual funds.
“We are excited to be continuing to develop our Kenyan Capital Markets by bringing good quality asset-backed and regulated issuances to market that have attractive returns, strong international institutional backing and the highest standards of corporate governance. The lack of such issuances has meant there are very limited alternative investment opportunities in Kenya. We are extremely pleased that we also secured an anchor investor – InfraCo Africa – who invested $10m in KES equivalent into the Acorn REITs,” Acorn CEO Edward Kirathe said.
The Acorn Affordable Student Housing project will phase the delivery of 11 purpose-built housing blocks in Nairobi over the next five years. The buildings will comply with IFC EDGE (Excellence in Design for Greater Efficiencies) standards for green building, reducing their environmental impact by at least 20%.
Infraco said the initiative is expected to act as a catalyst for investment into student accommodation and to demonstrate that REITs can offer a credible funding source for the wider affordable housing sector.
Acorn holdings have had a long-standing relationship with Private Infrastructure Development Group (PIDG), which is the parent of Infraco.
In October 2019, PIDGs GuarantCo provided a 50 per cent credit guarantee to investors in Acorn’s KES 5 billion note programme that raised KES 4.3 billion, pioneering a green bond which was dual-listed on the Nairobi Securities Exchange (NSE) and London Stock Exchange (LSE).
Emerging Africa Infrastructure Fund invested KES 1.3bn (US$12.7m), anchoring the issue as the largest single investor in the successful note which raised a total of KES 4.3 billion. PIDG Technical Assistance increased the competitiveness of the financial instrument by providing Acorn with a part-returnable grant to support the costs of the loan note issue.