World Bank arm IFC targets logistics firm with Sh1bn investment

The World Bank’s investment arm, International Finance Corporation, is seeking to buy a Sh1 billion stake in commercial property company, Africa Logistics Properties (ALP).

ALP is currently raising Sh7 billion to develop three warehouses in Tatu, Tilisi and Embakasi.

“For the first phase of this project, ALP is raising $65-70 million (between Sh6.5 billion and Sh7 billion) to develop three key strategic sites around Nairobi. IFC’s proposed in injection includes an equity investment of $10 million (Sh1 billion) into ALP,” said IFC in a disclosure note.

ALP was formed last year by Briton Toby Selman backed by institutional investors and East African investment group Maris, with an eye on the warehouse and logistics business in the country.

The company has acquired 71 acres of industrial zone sites to set up grade A warehouses for international companies. ALP plans to start its first construction in the first quarter of next year.

Property developers have been turning to warehouse construction following increasing demand.

Major users of warehouses include producers of fast-moving consumer goods and importers of heavy equipment for construction, energy and the nascent oil and gas industry.

Key players in the warehouse sector include French firm Bollore Africa, formerly SDV Transami, which has over 100,000 square metre of warehousing space between Nairobi and Mombasa.

READ: French firm Bolloré to invest Sh2bn in Nairobi logistics hub

Private developers have benefited from the woes of listed logistic company, Express Kenya to set up new space.

Express, with 90,000 cubic metres of warehouse space, lost majority of its customers due to issues at its warehouses.

Private developers with interest in the warehouse business include Erdemann Properties who have 15 units of go-downs covering a build-up area of 120,000 square feet. Alpha Centre along Mombasa Road has 90 go-downs on 10 acres.

Competition in the sector has seen space price stagnate with Knight Frank researchers noting the current prices are not attractive owing to high land cost in areas considered prime for warehouse facilities such as Mombasa Road.

Current rental rates for warehouses average Sh45 a square foot.

ALP hopes completion of huge infrastructural projects in the country will push up the volume of transit goods in the country, bulking up the demand for storage space.

The government-driven Standard Railway Gauge and the Lapsset projects are aimed at ensuring faster movement of goods in the country making logistics an attractive business.

Kenya was voted the second friendliest market for logistic companies in Sub Saharan, only behind South Africa, in a survey conducted by Knight Frank making it an attractive destination for investors.