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Actis raises $278 mln for Africa real estate

Tuesday, 9 Oct 2012 | 8:44 AM ET

NAIROBI, Oct 9 (Reuters) - Emerging markets private equity firm Actis has raised $278 million for investment in African real estate to ride a housing boom fuelled by a growing middle class.

Actis, one of the largest private equity investors in the world's poorest countries, said on Tuesday the fund, Actis Africa Real Estate 2, will focus on retail and office development in east, west and southern Africa, excluding South Africa.

Although African economies are growing quickly - second only to Asia - there is a lack of sufficient liquidity in Africa's public capital markets, and investors are increasingly turning to private equity to tap into the continent's economic growth.

"Sub-Saharan Africa has a population of 800 million people and is the fastest urbanising region in the world but lack of capital often constrains real estate development," David Morley, head of Real Estate at Actis, said in a statement.

"Governments recognise the crucial role of FDI (foreign direct investment) in this regard."

Infrastructure development is a capital-intensive business that most African governments struggling with large budget deficits cannot afford, making other regions more attractive to investors.

The private equity group has over $300 million invested in the east African region.

Earlier this year, it said it was looking to invest around $300 million annually in Africa, with much of that earmarked for bigger markets such as South Africa.

Paul Fletcher, a senior partner at Actis, said the fund was evidence of Actis's broader investment plan of building domestic infrastructure in the emerging markets.

(Editing by James Macharia and mark Potter)

((nairobi.newsroom@reuters.com)(Tel: +254 20 222 4717))

Keywords: ACTIS REALESTATE/