KENYA – Emerging Africa Infrastructure Fund (EAIF), an infrastructure fund managed by Investec Asset Management, invested 1.3 billion shillings (US$13m) in the green bond issued by Nairobi-based property developer Acorn Holdings, during the past week.
According to Cytonn Investments, the total funds raised via the green bond amounted to 4.3 billion shillings (US$43m), with the funds being raised mainly from pension funds, development finance institutions, and commercial banks.
The funds raised in the green bond deal are meant for the construction of affordable student housing projects, where Acorn is set to begin construction of around six green-certified student properties in Nairobi. These properties are expected to create accommodation for about 5,000 students in Kasarani, Karen, Nairobi West and Ngara in Nairobi County.
The investment will mark the EAIF’s first ever transaction denominated in the local currency, showing a rise in appetite for supporting projects in local currency.
This is expected to open the issuance of securities to global investors looking to invest in the local currency, as it shows the confidence in the stability of the Kenyan Shilling by international investors, who usually tend to invest in stable currencies.
The properties will be developed by Acorn Holdings Ltd, a joint venture between Acorn Group Ltd, a property developer operating in East Africa, and Accord Holdco, a Helios Investment Partners subsidiary based in London.
This deal represents a first of many bonds with “green certification”, a trend that we expect to pick up the pace, especially with the proposed tax exemption for similar instruments, following changes in the Finance Bill 2019, which is at the Presidential assent stage.
The issuance and subsequent success of the green bond is expected to benefit both investors and the stakeholders in the long run considering its focus on environmental issues and a more sustainable economy, a trend that has been picking up pace in other markets.
The Emerging Africa Infrastructure Fund is managed by Investec Asset Management. EAIF is part of the Private Infrastructure Development Group, which is a multi-donor organisation with members from seven countries and the World Bank.