Institutional investor Mergence Investment Managers, through its Infrastructure and Development Equity Fund, has acquired a controlling equity stake in a portion of affordable rental housing group, Live Easy.

Live Easy is noted to be one of the country’s largest affordable housing and lifestyle brands with 2 500 units in six building complexes in prime locations between Johannesburg and Pretoria in Gauteng, and with an additional 1 000 units under development.

The focus is on the affordable housing segment, aiming to close the gap between social housing and privately owned homes.

“We identified Live Easy as a first-of-its-kind initiative in South Africa, a true trailblazer in transitioning people living in unsuitable or undesirable conditions into a safe, secure and well-managed housing environment,” says Mergence Private Markets senior investment principal Kasief Isaacs.

The tenant age profile ranges predominantly between 21 and 30 years of age. Many are in their first jobs or professions, with about 30% earning less than R15 000 a month and a further 40% earning less than R20 000 a month.

They need accommodation which matches their aspirations and has easy access to their place of work, Mergence points out.

Isaacs says Live Easy provides a solution to this segment of customers who are price sensitive but demand an upmarket look and feel lifestyle with quality finishes, a variety of amenities and 24-hour security.

It is particularly attractive to young women, who make up 59% of the tenant profile.

The Live Easy units are so-called “nanos”, comprising an average 18 m² home, with a kitchenette and bathroom, at an average rental of R3 250 a month. On-site amenities include shared workspaces, Wi-Fi, lounges, chill areas, playgrounds, open spaces, retail shops, laundromats, gyms and creches. This allows for a fully integrated affordable housing solution.

In line with the environmental, social and governance, or ESG, investing ethos within the private markets business of Mergence, the Live Easy investment has both a social and an environmental impact.

For example, in terms of environment, by deliberately focusing on the conversion of existing buildings, Live Easy has a smaller environmental impact than constructing apartment blocks from the ground up. It further plays a key role in revitalising buildings that otherwise may have gone into severe decline.

Mergence acquired the majority stake in Live Easy from funds advised by Stockdale Street, with one of South Africa’s largest commercial banks and Westbrooke Alternative Asset Management respectively providing senior and mezzanine debt. Mergence’s legal advisers were Webber Wentzel.

The investment sits in the Mergence Infrastructure & Development Equity Fund I. The Live Easy deal pushes the Fund to near-closing. Mergence is raising capital for a sequel fund, the Mergence Infrastructure & Development  Equity Fund II.