Student hostels developer Acorn has raised Sh2 billion from bond investors to develop two new properties.
This is the latest fundraising for Acorn, which raised Sh4.2 billion through a corporate bond in October 2019.
The real estate developer also raised Sh2.1 billion from investors in March when it split its portfolio into two — a development and an investment trust.
Acorn says the new cash will be used to expand its student hostels assets by adding two more units.
“The additional financing will go towards the development of two student accommodation properties providing 2,654 beds bringing the total number of developments funded under the [bond] programme to eight with a total bed capacity of 7,349,” the company said in a statement.
Acorn’s offer was oversubscribed, having targeted Sh1.4 billion. This is the latest corporate bond to be oversubscribed after Family Bank raised Sh4.4 billion last month against a target of Sh3 billion.
It signals a renewed interest in the corporate bond market where new issues had dried up following defaults by collapsed firms such as Chase Bank and Imperial Bank.
“We see the oversubscription of our green bond as a huge vote of confidence in Acorn and the wider capital markets, especially given the ongoing Covid-19 pandemic,” Acorn’s chief executive Edward Kirathe said in a statement.
Acorn’s bond enjoys a partial credit guarantee of 50 percent of the principal and interest by GuarantCo, a fund backed by the governments of the UK, the Netherlands, Switzerland, Australia, Sweden, Germany and the International Finance Corporation.
The property developer says it raised the Sh2 billion from a diverse group of investors, including Kenyan pension funds, banks and re-insurance companies.
Acorn has been pursuing a strategy of building modern student accommodation facilities near universities. The firm has already completed three hostels in Parklands, Ruaraka and along Jogoo Road.
Beds available across the country are approximately 280,000 against the total number of university students of about 600,000, according to Acorn.