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NAIROBI (Capital Markets in Africa) – Cytonn Investments acquired a 25 per cent stake in real estate developer Superior Homes, as it aims to grow its property portfolio in the Kenya market.
The investment firm which has a Sh73 billion real estate portfolio sealed the deal yesterday by injecting Sh1 billion in Superior Homes, setting pace for mergers and acquisitions in the sector.
The series of transactions as structured values Superior Homes at about Sh4 billion, mainly based on its landmark development at Greenpark estate in Athi River, which currently has more than 450 completed houses. The developer has also announced plans to build a 50-room luxury hotel to be called Elementaita Mountain Lodge.
“The deal is complementary and compelling. In Superior Homes, Cytonn gets a partner that has a strong track record in master-planned developments and also construction capabilities. And Superior Homes gets a partner that has a strong track record in structuring real estate investment products,” Cytonn’s managing partner and CEO Edwin Dande said.
Ian Henderson, Managing Director of Superior Homes, said: “In Cytonn, we have found an exceptional real estate investments structuring partner to work together as we execute our real estate development strategy for our next period of growth. After a strong 10-year track record, it was important to tie up with a partner with shared values, aspirations and complementary capabilities.”
Cytonn Investments Management Limited has been courting Superior Homes since October 2016, culminating to the transaction led by adviser I&M Burbidge Capital for Superior Homes, and Bowmans as the legal advisors. Cytonn was advised by Cytonn Advisory while legal advisers were Taibjee and Bhalla and accountants are Grant Thornton.
Superior Homes has established itself as a strong brand in real estate, with a track record of delivering comprehensive gated community projects in Kenya. A deal to build houses in Athi River and the Nairobi Metropolis is in the pipeline. The developer is building phase five of the 163-acre housing development (Green Park) launched in 2004, which has more than 450 residential units in five clusters.
Cytonn’s chief investment officer Elizabeth Nkukuu said the 25 per cent stake investment is in line with Cytonn’s strategy of connecting capital from global and institutional investors, such as Taaleri of Finland who are Cytonn’s development financing partners.
“This enables us to provide to our investors yet another segment of exposure in real estate,” Nkukuu said.
The acquisition brings Cytonn’s investment portfolio to Sh17.5 billion up from Sh16.5 billion, the value of investment the firm manages for clients.