InfraCo Africa becomes anchor investor in Acorn Holding’s US$10m REIT

KENYA – InfraCo Africa, part of the Private Infrastructure Development Group (PIDG), has subscribed to the Acorn Holdings Ltd (Acorn) Real Estate Investment Trust (REIT) by investing US$10 million enable Acorn to scale its business.

The investment will help build the company’s track record of delivering purpose-built student housing in Kenya and helping to mobilise local capital markets.

“This subscription marks our first investment into affordable housing, and I am delighted to take this step with Acorn, a well-respected developer of high quality student accommodation,” InfraCo Africa’s CEO, Gilles Vaes noted.

“Expanding Acorn’s student housing offering will support Nairobi’s university students to achieve their ambitions, underpinning Kenya’s future economic development under its “Big 4” agenda. As the anchor investor in the Acorn REITs, our involvement will also strengthen local capital markets to support similar infrastructure  initiatives in the future.”

As student numbers grow, Kenya is experiencing a chronic shortage of suitable student accommodation and Acorn is seeking to attract private sector investment from Kenya’s local capital markets in order to achieve its ambitious growth strategy. 

The company has launched two REITs – a Development REIT to support development of housing projects, and an Income REIT for operational housing blocks. 

Unlike traditional equity, REITs offer a tax efficient means of raising capital, enabling Acorn to achieve scale quickly and as an anchor investor into both REITs, InfraCo Africa’s involvement gave significant comfort to local private sector investors who were considering REITs for the first time and mobilised funds from local pension schemes, insurance companies and high net worth individuals.

“As the anchor investor in the Acorn REITs, our involvement will also strengthen local capital markets to support similar infrastructure  initiatives in the future”

Gilles Vaes

On his part, Edward Kirathe, CEO of Acorn Holdings Ltd. said, “We are excited to be continuing to develop our Kenyan Capital Markets by bringing good quality asset-backed and regulated issuances to market that have attractive returns, strong international institutional backing and the highest standards of corporate governance. The lack of such issuances has meant there are very limited alternative investment opportunities in Kenya. We are extremely pleased that we also secured an anchor investor – InfraCo Africa – who invested US$10m into the Acorn REITs.”

Delivered in two phases, the 11-block initiative will provide a total of 8,800 additional student beds over the next 5 years with the buildings complying with IFC EDGE (Excellence in Design for Greater Efficiencies) standards for green building, building on the high standards developed to certify the first Green Bond in East Africa in 2019.

By offering a range of accommodation types, Acorn will ensure that students with a range of income levels can access affordable housing with all students having access to 24 hour electricity, wi-fi, clean water and sanitation as well as social areas and safe transport to academic institutions.

Security will be paramount, with students accessing separate male and female accommodation using biometric cards.

Acorn continues to develop tailored solutions to ensure safety and well-being of women students, contributing to SDG 5 Gender Equity with female housekeeping and security staff employed to ensure that women feel safe in their student housing.

PIDG and its companies have worked together closely, providing key finance and expertise to support Acorn’s ambitions for growth. 

GuarantCo provided 50 percent credit guarantee to investors in  Acorn’s US$45.6 million note programme that raised US$39.2 million in October 2019, a pioneering, green bond which was dual-listed on the Nairobi Securities Exchange (NSE) and London Stock Exchange (LSE). 

Emerging Africa Infrastructure Fund invested US$12.7m), anchoring the issue as the largest single investor in the successful note which raised a total of US$39.2 million. 

PIDG Technical Assistance  increased the competitiveness of the financial instrument by providing Acorn with a part-returnable grant to support the costs of the loan note issue.

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