News from - International Housing Solutions

More than R7bn of international investment funding could soon be pouring into the provision of affordable housing in SA and other African countries as a result of initiatives by International Housing Solutions (IHS), which recently opened its Africa head office in Johannesburg.

The company is a joint venture between MuniMae, a leading provider of debt and equity financing for affordable housing in the US, and top Irish property group Howard Eurocape. Prominent investors are its CEO Cathal Conaty and Howard Eurocape chairman Frank Gormley.

Against stiff competition from a large number of applicants worldwide, IHS has just won a tender from the US Overseas Private Investment Corporation (OPIC) to commit US$100m in funding as the basis of a larger investment pool of up to US$1bn (or some R7,2bn) to finance housing for low- and middle-income households in Africa and the Middle East.

OPIC is the US government-sponsored agency that supports US private investment in emerging markets. It provides funding (from large structured finance transactions to small business loans), political risk insurance and other assistance to companies that, in turn, help promote the further economic development of developing countries.

“We are very excited to have won such a competitive tender and to be able to bring such large amounts of foreign investment into South Africa,” says Soula Proxenos, the IHS managing director for the UK and Africa.

“Both OPIC and IHS are committed to making a difference in developing countries around the world, and this amount of capital is a major step toward really making an impact.”

She says some of the funds will be used to support affordable housing projects in other countries in sub-Saharan Africa and the Middle East, but that a “very substantial share” is expected to come to SA.

Proxenos points out that the company’s US partner MuniMae has a long track record of successfully raising third-party capital for affordable housing projects, and says there is currently a wave of interest in SA among international investors. “So we are very confident of raising the additional capital.”

IHS is, she says dedicated to helping bridge the housing gap that exists in SA. “There are some 2,4m homes that still need to be built over the next few years, the latest National Treasury study shows, and as with our business in the US, we want to reinforce the idea that doing good can also make for good business.”

Meanwhile the IHS director for South Africa, Elize Stroebel, says the company has already identified several housing projects nationwide that are attractive investment targets. Several of these are focused on inner-city regeneration, particularly in Johannesburg, as well as on building up a stock of affordable rental housing.

“We believe there are many opportunities in which we can accelerate the current pace of regeneration of SA cities,” she notes. “We have been working on several deals that are in the approval stage and will be announcing them once they have been finalised.”

She says IHS can be a valuable partner in any local project because of its expertise in affordable housing and understanding of what it takes to make these investments work. “OPIC backing will also help to lower our overall cost of funds. At the same time, however, we will not be providing finance directly to families in the form of mortgages – we will always work through local financial institutions.”

*For more information contact Elize Stroebel at estroebel@housingsolutions.ie.

Article by: www.housingsolutions.ie