$500m fund for African infrastructure


18 October 2011

The African Infrastructure Investment Fund 2, which focuses on infrastructure equity investments in sub-Saharan Africa, has announced its final close with commitments of US$500-million (approximately R3.6-billion) secured from institutional investors.

The fund is promoted and advised by African Infrastructure Investment Managers (AIIM), a joint venture between the infrastructure and real assets business of Australia’s Macquarie Group and South Africa’s Old Mutual Investment Group.

The fund, which reached its first close of $320-million in March 2010, targets core infrastructure investments in areas such as roads, airports, power, telecommunications, rail, ports, social infrastructure and other capital-intensive developmental assets.

“The strong investor support for [the fund] demonstrates that Africa is climbing up the agenda of investors,” AIIM chief executive Andrew Johnstone said in a statement last week. “We have a strong pipeline of potential opportunities under detailed review, primarily in the transport and energy sectors, and we are pleased that [the fund] has already committed 24% of its capital to investments in the transport sector.

“We are now building on the momentum of this successful fund-raising and will look to launch a parallel fund initiative in West Africa.”

Macquarie and Old Mutual Investment Group are established infrastructure investors, and fund builds on this experience in Africa.

Catalysing infrastructure development

The lack of investment in infrastructure is considered one of the more serious impediments to improving the economic growth trajectory of African economies.

The fund is expected to catalyse infrastructure investment activities on the continent, by mobilising equity capital, and access to global experience of successfully delivered, sustainable infrastructure assets. It will invest in development-stage, greenfield and brownfield projects, as well as the rehabilitation and restructuring of existing assets.

“Many international institutions have been keen to participate in [the fund], and we are very pleased that AIIM has raised a significantly sized fund despite the difficult fundraising environment,” said Old Mutual Investment Group’s head of alternative investments, Paul Boynton.

AIIM has established offices in Lagos, Nigeria, and in Nairobi, Kenya, and expects fund capital to be directed largely at West and East Africa, in addition to Southern African Development Community countries, where there is an enormous need for infrastructure that will facilitate economic growth.

“Our experience investing on the African continent – outside South Africa – has shown that these projects make a real difference to the economies and welfare of people in sub-Saharan Africa.”

SAinfo reporter

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