Proparco, the French development finance institution, and 27four, a South African investment manager, spearheaded a substantial R550 million (28.7 Million USD) investment in the Divercity Urban Property Group, accompanied by reinvestment from its existing stakeholders.
The primary purpose of this investment is to facilitate the expansion of the portfolio and optimize the balance sheet. Carel Kleynhans, the CEO of Divercity, expressed the significance of this financial injection, noting that it would pave the way for the development of more than 2,500 new apartments. He emphasized the importance of showcasing the positive impact and commercial viability of Divercity’s economically-productive, sustainable, and empowering urban development model.
In South Africa, the majority of affordable housing is situated at the urban periphery, distant from economic opportunities and essential amenities. This spatial arrangement perpetuates the spatial segregation inherited from the Apartheid era and hampers various social, developmental, and economic outcomes.
Founded in 2017 and positioned as a South African investment platform, Divercity is dedicated to providing affordable rental housing with supporting amenities in densely populated and centrally-located urban precincts. Mardé van Wyk, Principal at 27four, acknowledged the acute shortage of quality affordable accommodation in South African cities. Expressing enthusiasm for Divercity’s innovative approach to this persistent challenge, 27four is pleased to contribute to the funding of their expansion.
This investment by Pro parco and 27four aligns with the government’s prioritization of boosting affordable rental offerings in response to the severe housing shortage. Furthermore, it aims to counteract decades-long spatial segregation in the country. Harvard University’s Growth Lab, in its recent “Growth Through Inclusion in South Africa” report, identified spatial exclusion as a primary barrier to economic growth in South Africa, alongside state capacity issues. To address these challenges and propel South Africa toward growth, the report recommends the construction of more densely populated housing clusters closer to business centers — precisely what Divercity endeavors to achieve. The R550 million transaction not only catalyzes foreign direct investment for South Africa but also leverages the deep local context understanding of in-country investment partners 27four, resulting in a high-impact deal that significantly benefits the South African market.
Gregor Quiniou, Principal at Pro parco, emphasized that beyond revitalizing South African cities, the project provides an opportunity to support energy-efficient building programs aimed at achieving EDGE certification. The initiative aligns with several development goals, including Sustainable Development Goals (SDGs) 5, 8, 11, and 13. These goals encompass job creation and combating gender inequality by offering safe and best-in-class accommodation for tenants, a demographic where women comprise approximately half of Divercity’s tenant base.
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert. As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard.