Britam building situated at Upper Hill in Nairobi. Britam and Rafiki Microfinance Bank have agreed to boost funding of youth enterprises. FILE
Investment firm Britam has provided Sh1 billion seed capital in a multi-billion-shilling property fund, setting the stage for other investors to put their money in the venture.
Knowledgeable market sources not authorised to speak to the press told the Business Daily that Britam had provided the initial capital to the fund to offer confidence to other investors such as pension firms and high-net-worth individuals (HNWI) to participate in the project.
Fundraising of the venture — expected to net a total of Sh10 billion — is hoped to be completed by early next year.
The fund will undertake big-ticket projects in the booming property market and is part of Britam’s plans to grow its asset management and private equity business.
“The fund has been registered in Mauritius and Britam has invested Sh1 billion to start the fundraising process,” said a source who sought anonymity. “Fundraising is being done by private placement and should close by early next year.”
Among the investors expected to take part in the venture are pension funds, insurance companies, private equity firms, local and foreign HNWI investors.
The specific property developments are yet to be identified, with Britam expected to run the portfolio of real estate through its asset management arm British-American Asset Managers (BAAM).
The property fund will reward investors with earnings derived from a mix of rental income and capital gains realised from disposal of units.
The fund is expected to generate more earnings for Britam’s portion of equity investment besides boosting the investment firm’s fees for its role as the asset manager.
Its asset management unit recently raised hundreds of millions of shillings from investors and used the proceeds to buy Lang’ata House — a commercial building located at Wilson Airport.
Britam said investors in the property will earn a rental yield of eight per cent in dollar terms on an annual basis besides capital gains.
The investment firm’s net profit in the first half rose 28.7 per cent, helped by capital gains in its equity portfolio. Its net profit stood at Sh2.1 billion in the six months to June compared to Sh1.6 billion a year earlier.
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