CIC sets up unit for real estate joint ventures

CIC Insurance has set up a subsidiary to spearhead its investments in real estate that will be funded through joint ventures with international investors.

The company joins other insurance and investment firms such as Britam and Centum that have also created new units to structure big-ticket joint ventures targeting the booming property sector.

“The registration of CIC Investment Limited is in progress and we are capitalising the subsidiary with an initial Sh10 million,” said Nelson Kuria, CIC chief executive.

“This is the vehicle through which we will partner with international investors in our planned real estate projects.”

Mr Kuria added that CIC would approach large institutional investors such as private equity firms and development finance institutions to set up residential and commercial units in its land banks in Nairobi and Isinya.

CIC follows in the footsteps of Britam which has provided a Sh1 billion seed capital in a new Mauritius-registered subsidiary that is expected to invest up to Sh10 billion in regional property projects.

Britam is eyeing pension funds, insurance companies, private equity firms, local and foreign high-net-worth investors to provide the balance of the capital.

Centum has also incorporated Two Rivers Lifestyle Centre Limited in Mauritius to spearhead its development of hotels, office blocks and residential units on its 100-acre land next to Runda estate.

The investment firm will partner with other investors and financiers to fund the developments.

The move to seek tie-ups with deep-pocketed investors signals the capital-intensive nature of big property investments which cost billions of shillings.

Mr Kuria said CIC’s new subsidiary would fund its property ventures through a mix of equity and debt.

The company earlier this year acquired 400 acres of land in Isinya and Kitengela area at a cost of Sh1 billion for a multi-billion-shilling property development targeting the middle class.

The insurer plans to build maisonettes on the land and sell them mainly to Kenyans in the diaspora for between Sh7 million and Sh12 million apiece.

“We are working with diaspora saccos in the UK and the United States. We expect their members to buy most of the units,” said Mr Kuria.

CIC also has 200 acres in Kiambu which it bought in 2010 for Sh560 million with a view to put up a mixed development comprising residential and office blocks.

Mr Kuria said the property investments would boost the insurer’s earnings and diversify its business away from the mainstay insurance premiums. The firm relies heavily on its life and general insurance business that accounts for more than 80 per cent of its income.