London’s first pan-African property fund raises £113m

Grit Real Estate Income (GR1T), an 8%-yielding African commercial property fund, has listed in London after raising $132 million (£113 million) from investors.

The company, which is already listed on the Johannesburg and Mauritius stock exchanges, failed to attract any money in its subscription offer but placed 92.37 million shares at US$1.43 with institutional investors.

In doing so it just cleared the minimum target of $120 million(£103) million it had sought. The money will be used to repay bank credit facilities and invest in a pipeline of new properties.

The four-year-old portfolio invests in commercial property outside South Africa, owning 22 properties in seven countries, focusing on blue-chip multinationals which make up two thirds of its tenants with most of its rental income paid in dollars and euros on leases rising at 3-5% a year.

Chief executive Bronwyn Corbett (pictured) said: ‘We are delighted to be making our debut on the London Stock Exchange and we are proud to be the first London listed pan-African real estate group. Grit has achieved another key milestone in its development and we look forward to continuing to work with our new UK based investors in the years to come as we seek to take advantage of the further opportunities for real estate investment assets in pre-selected African countries.’

Grit targets an annual dollar return of 12% from which it has paid eight dividends since 2014. For the six months to 30 June it is looking to pay a dividend of 5.9 US$ cents per share, which is equivalent to an annualised yield of 8.25%.

Trading in the new shares will start at 8am tomorrow. The ticker GR1T is not to be confused with Global Resources (GRIT) , a small UK listed mining fund.

Although not strictly a flotation, the Grit’s placing compares quite well to the eight investment company initial public offers (IPOs) that have taken place this year, raising over £1 billion. The biggest was earlier this month when Tritax Eurobox (EBOX) real estate investment trust raised £300 million. Earlier successful launches were Baillie Gifford US Growth (USA), which raised £173 million, and Life Settlement Assets (LSAA), which invests in second-hand life insurance policies sold by US citizens in poor health seeking to raise money. It raised £134 million.

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