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AGF Magazine - March 2019 issue

  • We focus on fixed income opportunities in both public and private markets. Read on to find in which fixed income instruments and in which African markets to invest on pp. 10-11. In addition, Ashley Benatar of Ashburton Investments shares his views on benefits and risks of investing in mezzanine debt on p.22.
  • We speak with Jérémie Ceyrac, Head of Equity, Responsible Investments at Proparco to learn more about the French development institution, financial products on offer, recent investments in Africa and African impact investment scene (pp. 13-15).
  • This month’s market feature focuses on Nigeria. Sven Richter, Fund Manager, Drakens Capital, writes about his recent trip to the West African country and his observations. “While Nigeria is attractive as an investment destination, the GDP growth is a disappointment for a county that we expect to be one of the leaders in Africa,” he says (pp. 16-17).
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News > Private Equity > PE Industry News

African infrastructure investments on the rise

Africa Global Funds
Nov. 21, 2016, midnight
551

Word count: 463

Private equity investment in African infrastructure has been an emerging theme over the past decade, according to Erika van der Merwe, CEO of the Southern African Venture Capital and Private Equity Association (SAVCA). 

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Private equity investment in African infrastructure has been an emerging theme over the past decade, according to Erika van der Merwe, CEO of the Southern African Venture Capital and Private Equity Association (SAVCA). 

“Private equity funds from various regions have been investing actively in infrastructure projects across sub-Saharan Africa, in the energy, transport and ICT sub-categories,” she said.

Van der Merwe added that investment into African infrastructure offers compelling exposure to African growth, while simultaneously helping to drive that growth. 

“Unlike performances in other world regions, infrastructure assets in Africa continue to offer private equity-style returns, and moreover enable private equity to invest in scale on a continent where there are limited investment opportunities of sufficient size,” she said.

According to the latest figures from the SAVCA 2016 Private Equity Industry Performance Survey, nearly one fifth (23.2%) of the industry’s unrealised investment portfolio in 2015 was in infrastructure. 

Of the transactions concluded by Southern African private equity managers in 2015, 14.2% were in the infrastructure sector.

Vuyo Ntoi, Investment Director and Head of Southern and Central Africa at African Infrastructure Investment Managers (AIIM), believes that private equity infrastructure in Africa will continue to grow and attract new players, while creating a positive impact for consumers. 

“In large, well-organised infrastructure markets on the continent, there has been a demand for investment opportunities. For instance, the South African renewables market has attracted attention from international private equity investors, creating a more competitive environment for project equity. The result of this has been positive for the South African power consumer, who will receive very competitively priced renewable energy,” he said.

Emile Du Toit, Head: PAIDF 2 at Harith General Partners, added: “Private investors in infrastructure projects, especially through private equity vehicles, have proven over time that they can deliver infrastructure services at competitive tariffs, whilst at the same time ensuring that risks related to cost overruns and time delays are not borne by the consumer, but rather by the private sector service providers.”

The positive knock-on effects of infrastructure investment are significant, including the fostering of cross-border investments and facilitating regional integration. 

“Private equity investment in Africa can and does serve as a catalyst for development on the continent, in a way that fosters the achievement of targeted and specified developmental goals: growth prospects are enhanced if infrastructure is made more efficient and can better support the flow of economic activity,” said  Van der Merwe. 

“Moreover, because this asset class entails equity ownership, the fund manager has influence and can define and shape the philosophy and principles by which the funded organisations and projects operate. Through its growing participation in African infrastructure, private equity will continue to demonstrate its capacity for functioning as a force for good,” she added.

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