Improvon expands into Kenya
The unlisted property developer is teaming up with private equity group Actis to expand further into Africa
SA unlisted industrial property developer Improvon has teamed up with private-equity investor Actis, to build the biggest industrial real-estate investment in Kenya’s history.
The two companies have created a joint venture called ImpAct to build the 40ha industrial business park development at an estimated cost of R1.7bn. The new development will be called Nairobi Gate Industrial Park.
The total developable bulk at the business park is 200,000m². The first two buildings at the park will be 5,000m² in size each.
The East African country is starved of modern logistics properties. Its facilities tend to be small-scale warehouses of poor building quality that do not meet standards demanded by manufacturers, e-commerce companies and pharmaceutical suppliers.
Improvon CEO Stefano Contardo said Kenya stood out as an African country to invest in while SA struggled with economic weakness and political squabbles. Kenya is forecast to grow at nearly 6% in 2019.
The development is Improvon's first in Kenya. The company already operates a business park in Zambia.
“Africa carries risks everywhere but conditions are improving. We have found that while SA struggles and looks slightly sketchy, other parts of the continent are looking more attractive. Kenya stands out for many reasons,” Contardo said.
“Some SA companies have established themselves there already and can be tenants for our development, Kenyan businesses understand English, they are dollar based and the market is not too competitive so we can do good work there,” he said.
The Kenyan legal system is based on English law.
Nairobi Gate, which is expected to open at the end of March 2020, will be located about 15km from the Nairobi CBD. It will be on land acquired by ImpAct, in the Northlands City precinct, a mixed-use project being developed in Ruiru, a town within 3km of Nairobi's border. ImpAct is providing all of the infrastructure around Nairobi Gate.
For 25 years, Improvon has built capacity to develop and let logistics and warehouse space in large, industrial nodes in SA. Contardo said the company had considered listing a few years ago to raise capital to expand. The listing did not go ahead but the company found “a strong partner in Actis”, which had decades of experience in investing in Africa, he said.
Louis Deppe, partner for real-estate at Actis, said he was confident that Nairobi Gate would be a success and that a similar design could be replicated in other African countries.
ImpAct was formed in 2017.
Correction: August 22 2019
An earlier version of this article erroneously said Improvon and Actis had created a joint venture called Affect. The joint venture is called ImpAct.