31851 - IHS-SA

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Summary of Investment Information

Project Number

31851

Company Name

IHS FUND II SA COLLECTOR, LP

Date SPI Disclosed

May 8, 2014

Country

South Africa

Region

Africa

Projected Board Date

Jun 9, 2014

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

May 24, 2021

Department

Gbl Ind, Manufact, Agribus & Services

Industry

Agribusiness and Forestry

Previous Events

Approved : Dec 28, 2012
Signed : Dec 19, 2012
Invested : Nov 16, 2016

Sector

Private Equity/Venture Cap Fund - Sector

Additional Project Attributes

Blended Finance

Project Description

The Project consists of investing in “IHS Fund II”, a ZAR2.4 billion (~US$300 million equivalent) affordable housing fund (the “Fund”) that will provide equity for the development of affordable housing projects primarily in South Africa and selectively in Sub-Saharan African countries (the “Project” ). The Fund will be managed by International Housing Solutions (IHS), through its main investment management team based in South Africa, International Housing Solutions South Africa (“IHS-SA”). This will be the second IHS fund to focus on affordable housing in South Africa, after the “South Africa Workforce Housing Fund I”, a R1.9 billion (~US$240 million) 10-year fund that was closed in 2008. IHS is one of the most important equity investors in the South African housing space. The target market will be lower-and-middle income houses priced between ZAR250,000 and ZAR800,000 (i.e. approx US$30,000 to US$100,000).The fund will focus on the following types of projects – (i) New Builds – Develop new single-family and multifamily housing, as well as related commercial real estate (ii) Conversions – Rehabilitation of existing real estate to multifamily housing (iii) Acquisition, Rental, and Sale – Transactions in single family and multifamily housing.

The IFC participation in this Fund will be an investment of up to US$25 million, but not to exceed 20% of total fund size. . In addition, an up to US$10 million concessional investment from the Global Environment Facility, through the IFC Earth Fund Platform, would support the Fund making investments in green housing projects in South Africa. The Fund will seek to deliver equity type returns with a target IRR of 20%+, net of fund cost, fees and carry. By the time the Fund matures, it is expected that safe and affordable housing would have been provided to over 20,000 families.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	25.0

Development Impact

The Fund will have the following development impacts:
1. Economic development: The Fund will help address the short supply of quality affordable housing and will increase the quality of life for the lower-middle income population in Sub Saharan Africa. The spillover effects will include the provision of urban infrastructure through the development of housing communities where families can live, work and play. The Fund is expected to deliver well over 20,000 housing units over the next 10 years
2. Demonstration Effect: Successful implementation of the fund will stimulate other industry stakeholders to replicate this model in other countries. IFC's early involvement in this fund provides support for a successful close. IHS is also demonstrating that low-to-middle income housing in South Africa is a viable asset-class
3. Private Sector Infrastructure Development: The fund will contribute to urban infrastructure development and surrounding community development, such as roads, electricity, water access and sanitation and will mobilize government investment on supporting infrastructure
4. Job creation: The Fund will foster, through its investee companies, the creation of direct and indirect jobs during construction of the residential properties, and also during property maintenance. The Fund is expected to create over 15,000 construction jobs over its lifetime
5. Linkages: The Fund will increase the demand for construction and building materials in the target markets and will stimulate the use of local goods and services.

IFC's additionality will manifest itself in the following areas:
1. IFC Global housing sector expertise: The IFC will provide general insights to the Fund management on how best to assess the best investment opportunities in the affordable housing sector as it expands into other countries outside South Africa
2. E&S Expertise: The IFC will support IHS in the areas of Environmental and Social Standards and best practices for the Fund.
3. Fostering a Long Term Partnership: Providing the Fund with financing support will help IFC establish long term business relations with a key partner in Africa, through which IFC can participate in a sector where it has a clear role.
4. IFC's Stamp of Approval: The IFC's participation in this transaction will send a strong signal and endorsement of low cost housing as a viable asset class.

E&S Category Rationale / Risks and Mitigation

The project is categorized as FI: 2 (medium risk) according to IFC’s Environmental and Social Review Procedure. A review of the Fund’s existing investments in South Africa and the approach thereto confirms general compliance with South African legislation. Note: Alignment with South African legislation will result in compliance with the Performance Standards. IHS commissions an Environmental Impact Assessment and companion Environmental Management Plan by an independent consultant for all projects where approval thereof is required by the relevant environmental authorities in accordance with South African regulations. Further, all construction operations or work place environments are required to comply with the requirements of the national Occupational Health and Safety Act which includes the requirement for a Safety Officer to be appointed at each site.

In accordance with IFC's Access to Information Policy, IFC will periodically disclose the names, locations and sectors of sub-projects that have been supported by IFC investments through private equity funds, subject to regulatory constraints and market sensitivities. The sub-project(s) listed below reflect(s) the status of the portfolio as of January 1, 2021.

Investee	Country of Investment	Sector
IHS Fund II SA PVE	South Africa	Commercial Property Fund
IHS Fund II SA Rental Trust 2	South Africa	Commercial Property Fund
IHS Fund II SA Rental Trust 4	South Africa	Commercial Property Fund
IHS Fund II SA Rental Trust 5	South Africa	Commercial Property Fund
IHS Fund II SA Rental Trust 6	South Africa	Commercial Property Fund

Key issues associated with this investment relate primarily to the Fund’s approach to the management of E&S risks when developing projects in Sub-Saharan Africa, other than South Africa. More specifically these would relate to ensuring alignment with recognized building standards including that related to the life and fire safety, water quality as supplied to developments, the disposal of waste water and occupational and safety during construction. To mitigate these risks and formalize the approach to E&S management across all operations, various actions will be initiated by the Fund.

Task Description	Anticipated Completion Date
Appointment of experienced Environmental and Social (E&S) Officer.	Condition of Commitment
Establish an Environmental and Social Management System (ESMS) and submit to IFC for review. The ESMS shall reflect the Applicable Requirements – IFC’s Exclusion List, National Laws and IFC’s Performance Standards - and include a detailed due diligence procedure.	Condition of Commitment
Ensure that the E&S Officer and other staff responsible for the implementation of the ESMS are trained on E&S risk management	Initial training completed – Condition of Disbursement.
Submit the first 3 E&S due diligences to IFC for review.	Prior to presentation of these proposed investments to the Fund’s Investment Committee for approval.
Submit the due diligence for all Category A projects to IFC for review, in accordance with the ESMS.	Prior to presentation of the proposed of individual investments to the Fund’s Investment Committee for approval.

Contacts

For Inquiries About the Project, Contact

International Housing Solutions (Pty) Ltd
54 Peter Place Road, Peter Place Office Park
Hampton House, Block H, Ground Floor, Bryanston
Johannesburg
Gauteng
2191
South Africa

Tel: 27 (0) 11 300 8600
Email : mailto:infoSA@intlhousingsolutions.com

For Inquiries and Comments About IFC, Contact

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Fax: 202-974-4384
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IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

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CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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