Logistics and warehousing property group Improvon secures more Africa access

Unlisted logistics and warehousing property group Improvon has concluded a deal with emerging markets private equity group Actis to develop warehousing on the rest of the continent.

Actis, which has had success in retail developments on the continent, wants to replicate this in the industrial sector.

The deal will at the same time help Improvon in its quest ...

York commercial park in Lusaka, Zambia's capital. The park is 40ha and situated on Kafue road.

• Their first Zambian 40ha asset is York commercial park, have been built so far.

• Its Kenyan 42ha asset is Northlands logistics park, located in Nairobi and is under construction.

Unlisted logistics and warehousing property group Improvon has concluded a deal with emerging markets private equity group Actis to develop warehousing on the rest of the continent.

Actis, which has had success in retail developments on the continent, wants to replicate this in the industrial sector.

The deal will at the same time help Improvon in its quest to double in size to USD1bn in the next five years and paves the way for a possible listing.

Improvon CEO Stefano Contardo said Actis had bought a significant stake in Improvon, a group worth about USD500mn.

The two companies will share in profits made in Africa, with Actis being Improvon’s main source of deals on the continent. In terms of the deal, Actis will locate sites in the rest of Africa where Improvon can build and retain high-end logistics properties.

Large industrial nodes

Improvon has, over the past 24 years, built capacity to develop and let logistics and warehouse space in large industrial nodes in SA but it has needed to find a way to access other countries within the continent, said Contardo.

Actis would allow it to do this without the company having to list on the JSE in search of capital from other investors.

Improvon had developed a world-class product, which could be implemented in the rest of Africa, he said.

“Improvon was formed in 1994. Back then we were already trying to pre-empt the kinds of services which companies involved in fast-moving consumer goods would desire for a number of years. We began planning and developing high-end logistics assets that could appeal to multinationals and retailers,” Contardo said.

Improvon had then considered listing on a number of occasions in the past few years given its significant size as a property company but uncertain market conditions had stopped it from doing so.

“In 2016, we were looking at listing as we had reached a point where we could access market investors but then the Brexit vote happened in June of that year, which had an effect on numerous property markets across the world including SA. Then later that year Donald Trump won the US election, which brought more uncertainty into property markets,” said Contardo.

Improvon had then considered listing on a number of occasions in the past few years given its significant size as a property company but uncertain market conditions had stopped it from doing so.

“In 2016, we were looking at listing as we had reached a point where we could access market investors but then the Brexit vote happened in June of that year, which had an effect on numerous property markets across the world including SA. Then later that year Donald Trump won the US election, which brought more uncertainty into property markets,” said Contardo.

Actis would help find sites for Improvon to build warehouses given its network on the continent. To begin with, the two companies have chosen to focus on Zambia and Kenya.

“At this stage we are waiting to build up our portfolio across SA and key sub-Saharan African markets. We have about USD500mn in assets which we want to double over five years and we are well on track with that,” he said.

Their first Zambian asset is York commercial park, which is a 40ha development on which a number of industrial projects have been built so far.

Its Kenyan asset is Northlands logistics park, which is located in Nairobi and is under construction. This 42ha development situated on the Eastern Bypass of the city will include numerous industrial properties.

Actis said that Nairobi was regarded as the logistics gateway to East Africa.