Mauritius property developer Grea has been compelled to transfer its office to Kenya to access a $48.5 million (Sh6.3 billion) investment from South Africa’s Public Investment Corporation (PIC), after its government cracked down on investments in tax havens.
South Africa restricted its state-owned entities from investing in low tax jurisdictions or using them as investment conduits, after the country was grey listed by the Financial Action Task Force (FATF), a global money laundering watchdog, in February 2023 for failure to meet anti-money laundering standards.
Grea is jointly owned by Mauritian multinational Grit Real Estate Income Group Limited (Grit) and South Africa’s state-owned PIC, which manages funds for a number of public sector pension funds. PIC also controls over 10 percent of the listed investments at the Johannesburg Stock Exchange (JSE).
Grea was set to raise a total of $100 million in a rights issue in June, where PIC was to contribute $48.5 million, but this was held up by the rules on investments into tax havens.
PIC requested a waiver from the investment restriction, which was granted by South Africa’s finance ministry on condition that Grea moves its office to Kenya from Mauritius.
The move is now set to hand Nairobi a windfall in terms of jobs, as well as potential taxes when Grea’s income starts being declared in Kenya.
“While all conditions precedent for the PIC Capital Investment have been satisfied, the release of the $48.5 million was delayed as a result of South Africa’s recent regulatory directive, restricting state-owned entities from investing in low-tax jurisdictions or using these as conduits for offshore investments,” said Grit in its annual report for 2024.
“Notwithstanding this directive, the South African Reserve Bank (SARB) on October 30, advised that the South African Minister of Finance has approved the request by the PIC, on behalf of the Government Employees Pension Fund of South Africa (GEPF) to participate in the rights issue, as part of the capital raise exercise, subject to the condition that Grea redomicile from Mauritius to Kenya, within the next 12 months.”
Grit informed its shareholders in the annual report that Grea’s shift to Nairobi was expected to be completed by November 2024.
Grea, which was founded in 2018 as a real estate subsidiary of Grit, has been developing property targeting diplomatic housing, healthcare, logistics and warehousing sectors across nine African countries.
In Nairobi, Grea, jointly with US-based Verdant Ventures, put up a 90-unit gated estate for lease to the US Embassy in Rosslyn at a cost of $48.5 million (Sh6.3 billion). Construction on the estate started in August 2020, and it was completed in September 2022.
Grea also put up a similar estate for the US government in Addis Ababa, Ethiopia, which was completed in November 2021.
The company has also developed a five-storey grade A office facility at Tatu City in Kiambu County at a cost of $44.9 million (Sh5.8 billion) for business process outsourcing firm CCI Global. Construction of the facility was completed in April this year.
