New fund raises over US$300M for African Infrastructure Investments

Old Mutual Investment Group (SA) / Macquarie Capital Joint Media Release

African Infrastructure Investment Fund 2, a fund promoted by African Infrastructure Investment Managers (“AIIM”), has announced its first close with unconditional commitments totalling USD $320 million (approximately R2.4 billion) from a high caliber group of seasoned investors. AIIM is a joint venture between Macquarie Capital of Australia (“Macquarie”) and Old Mutual Investment Group of South Africa (“OMIGSA”).

The Fund will be focused on infrastructure investment in Sub-Saharan Africa, targeting infrastructure and infrastructure-like investments including roads, airports, power, telecommunications, rail, ports, social infrastructure and related investments in capital-intensive developmental assets.

The international investors making commitments to the Fund in the first phase of capital raising (the end of which is referred to as the “first close”) include, among others: IFC, a member of the World Bank Group; the African Development Bank (“AfDB”); Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. (“FMO”, the Dutch development agency); Société de Promotion et de Participation Pour la Coopération Economique (“PROPARCO”, the French development finance institution); and Macquarie. The South African limited partner investors include Old Mutual Life Assurance Company of South Africa (“OMLACSA”) and the Development Bank of Southern Africa (“DBSA”).

“The caliber of international investors coming into the first close is testament to AIIM’s performance as an investment advisor since 2000. Their commitment to the Fund illustrates recognition by the international community that, in order to close the developmental gap between Africa and the rest of the world, the infrastructure backlog must be addressed collaboratively with enduring partnerships between African governments and the private sector. This dedicated pool of infrastructure equity will make a meaningful contribution to addressing the infrastructure needs of the continent,” said the CEO of AIIM, Mr. Andrew Johnstone.

Added Paul Boynton, a Director of OMIGSA and head of OMIGSA Alternative Investments: “Despite last year’s financial crisis, many international institutions have been keen to participate in AIIF 2, and we expect to raise even more funds in the coming year. 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. We expect these funds to be directed largely at West and East Africa, in addition to the SADC countries, where there is an enormous need for infrastructure that will facilitate growth in these economies over time.”

Bernard Sheahan, Infrastructure Director of IFC said: “IFC’s commitment today signals our strong support for a fund that will address a key constraint for developers of infrastructure projects in African countries – namely, the availability of equity capital.”

The infrastructure backlog in Africa has long been identified as a hindrance to the economic development of the continent. This dedicated pool of infrastructure equity will assist in addressing the shortfalls in the infrastructure funding by providing equity to investments which will include development-stage projects, greenfield and brownfield projects, as well as the rehabilitation and restructuring of existing projects.

Both Macquarie and OMIGSA are seasoned infrastructure investors with proven experience in the structuring of, and investing in, infrastructure businesses, and AIIF 2 builds on this African experience. The AIIM joint venture, formed in 2000, has successfully (both directly and indirectly) managed and advised three infrastructure-focused equity funds, namely: the South Africa Infrastructure Fund (“SAIF”), the African Infrastructure Investment Fund (“AIIF”), and the Kagiso Infrastructure Empowerment Fund (“KIEF”), managed jointly with Kagiso Trust Investments.

Together, these three funds have raised approximately R2.7 billion of equity for much-needed infrastructure projects, with investors including some of the major South African institutions. AIIM will act as an advisor to AIIF 2, which will continue to raise capital for a further 12-18 months.