London-based private equity fund, Actis, plans to construct a multi-billion- shilling commercial and residential estate on a 32-acre piece of land on Thika Road.
The land is owned by beer maker East African Breweries Limited (EABL).
The investment by Actis, which says it has set aside Sh6.4 billion ($75 million) to spend on projects in East Africa within the next 11 months— will deepen its stake in the region’s real estate sector.
Actis has significant shareholding in the Nairobi Business Park, which houses the Junction Shopping Centre along Ngong Road and Tanzania’s Capital Properties.
Senior Actis partner Paul Fletcher told the Business Daily in an interview that the private equity firm is focusing on investments in real estate, energy, consumer and financial service sectors.
“Late last year, we concluded a major real estate investment on the new Thika Highway, which is keeping us busy, but we are certainly on the lookout for at least one large, greater than $75 million (Sh6.4 billion), private equity investment in 2012,” he said.
Mr Fletcher did not offer more details on the Thika Road project, which will involve the construction of office blocks, a hotel and residential units.
Actis has contracted development consultancy firm GIBB Africa, which designs and supervises construction works, to undertake a feasibility study on the land along Thika Road.
The study includes checking the water, sanitation, electrical engineering and environmental screening.
“Actis is proposing to construct a mixed use development, comprising offices, hotel and commercial and retail areas on a 32-acre piece of land currently the property of EABL.
The land is located off Thika Road in the Ruaraka area of Nairobi,” said the notice.
The EABL’s land is close to Moi International Sports Centre, Kenya School of Monetary Studies, KCA University and Utalii Hotel.
Actis said it could not give further details on the plan because it is still subject to a series of approvals.
Details of the development are scanty, and it is not clear whether Actis is acting in a joint venture with other investors, whether EABL has sold the land to Actis or whether it is being developed on a lease or joint venture basis.
East African Breweries (EABL) declined to comment on the issue.
“We are currently in a closed period limiting us from commenting on the same,” said the EABL Group head of communications, Joseph Sunday.
The expansion of Thika Road into a super highway has attracted multi-billion shilling commercial and residential real estate developments such as the Kenyatta University City, Thika Greens and the proposed Tatu City.
Mr Fletcher said the outlook for private equity in the region is buoyant, driven by demographics, urbanisation and the natural entrepreneurial energy in the region.
The East African Community common market has also made the region an attractive investment destination.
Actis has also invested in infrastructure projects in the region including a 74 MW oil-fired power plant in Mombasa, a 190 MW gas fired power plant and processing facility in Songo Songo Tanzania and Umeme in Uganda, which is a 20-year government concession for power distribution.
The fund has also invested in agribusiness including timber in South Sudan and Tanzania, tea in Tanzania and in grain handling facilities in Mombasa in addition to financial services investments in DFCU Bank in Uganda and BCR Bank in Rwanda.
“We expect our investments to perform well in 2012. We have put the work in to ensure we have the right management teams, with the right strategy and projections. Due to high inflation in Uganda and Kenya we may find that the steep climb in bank lending rates result in some pain in the consumer sector,” said Mr Fletcher.