MICROCAPITAL BRIEF: CDC, Futuregrowth Participate in $36m Funding Package for Divercity Urban Property Fund to Build 2,500 Sustainable Housing Units in South Africa

The CDC Group, a development finance institution backed by the UK government, has announced a commitment of ZAR 500 million (USD 36 million) from it and other investors to the Divercity Urban Property Fund, a for-profit entity based in South Africa that invests in high-density urban areas. The funding is designated for the construction of 2,500 residential units, mostly in the city of Johannesburg, South Africa, over the course of five years. The unit pricing is intended to be affordable to households with low and moderate incomes, and the construction methods are designed to minimize emissions of greenhouse gasses.

In addition to those from CDC, the other monies are being provided by previous Divercity shareholders and Futuregrowth Asset Management, a firm in South Africa whose funds include “many [that] invest directly into development sectors that deliver significant social and development benefits to society.” During its 2019 fiscal year, Futuregrowth funded 21 projects, and as of 2021 it has 94 employees. Further financial records are unavailable.

Founded in 2017, Divercity invests in commercial, residential and retail assets in urban areas. Its goal is to provide low- and middle-income households with the ability to reside in an urban environment with access to essential services, education and work opportunities that allow residents to better their economic standing. As of 2021, Divercity’s portfolio is valued at ZAR 3 billion (USD 206 million), including 90,000 square meters of leasable commercial and retail space as well as 6,500 residential units, mostly in Johannesburg.

Established in 1948 as the Colonial Development Corporation, the mission of the CDC is to foster growth in “sustainable” businesses to raise living standards in developing countries. Since 2012, it has invested in 1,200 firms in Africa and South Asia using debt, direct equity investments and “fund-of-funds” strategies. During 2020, CDC’s investment portfolio was valued at USD 6.2 billion, and it reported new commitments worth GBP 1.75 billion (USD 2.47 billion).

By Teo Lin-Bianco, Research Associate

Sources and Additional Resources

CDC press release
https://www.cdcgroup.com/en/news-insight/news/cdc-leads-36-million-investment-round-into-south-african-affordable-housing-platform-divercity/?fl=true

Divercity homepage
https://www.divercity.co.za/

Futuregrowth homepage
https://www.futuregrowth.co.za/

CDC homepage
https://www.cdcgroup.com/

CDC financial figures
https://www.cdcgroup.com/en/our-impact/key-data/

Previous MicroCapital article on CDC
https://www.microcapital.org/microcapital-brief-cdc-group-announces-50m-risk-sharing-facility-with-absa-bank-to-boost-lending-to-households-msmes-in-africa/

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