Mergence Investment Managers, through its Infrastructure and Development Equity Fund, has acquired a majority stake in an innovative affordable rental housing company that caters for younger urban income earners.
Live Easy, founded seven years ago by entrepreneurs Andrew Huff and Jeffrey Froom, is one of SA’s largest affordable housing and lifestyle brands with 2 500 units in six building complexes in prime locations between Johannesburg and Pretoria in Gauteng. There are an additional 1 000 units under development.
The Live Easy units are so-called “nanos”, comprising an average 18 soiree metre home, with a kitchenette and bathroom, at an average rental of R3 250 per month. On-site amenities include shared workspaces, Wi-Fi, playgrounds, open spaces, retail shops, laundromats, gyms and creches, allowing for an integrated affordable housing solution.
Mergence Investment Managers senior investment principle Kasief Isaacs said in a telephone interview Live Easy is a “first-of-its-kind initiative in South Africa”.
The tenant age profile mostly ranges 21-30 years, with many in their first jobs or professions, with around 30 percent earning less than R15 000 per month and a further 40 percent earning less than R20 000 per month. Young women make up 59 percent of the tenants.
He said the investment had both a social and an environmental impact. Socially, the lives of thousands of tenants had been impacted and there was a long waiting list for units.
And by focusing on the conversion of existing buildings, he said, Live Easy had a smaller environmental impact than constructing apartment blocks from the ground up. In addition, buildings were revitalised that otherwise may have gone into severe decline.
He said the Live Easy deal meant that Mergence Infrastructure & Development Equity Fund I was near closing. Mergence was raising capital for a sequel fund, the Mergence Infrastructure & Development Equity Fund II.
Institutional investor Mergence invests on behalf of its largely retirement fund clients into sectors aligned with the National Development Plan and government infrastructure initiatives, including via public-private partnerships (PPPs).
Sectors for the fund’s investment include affordable housing, bulk infrastructure, digital connectivity, education, healthcare, renewable energy (16 projects across wind and solar) and water.
Isaacs said contrary to some perceptions around investing in infrastructure projects, Mergence Infrastructure & Development Equity Fund I had outperformed its benchmark of CPI + 7 percent , delivering a return of 16.94 percent to investors, since inception in 2015. “We do a great deal of work to ensure this happens,” he said.
BUSINESS REPORT