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Infrastructure investment funds set record fundraising target in 2021

Staff writer
Oct. 27, 2021, 9:14 a.m.
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Word count: 465

Africa-focused infrastructure investment funds have set record fundraising targets in 2021, according to new analysis by global law firm Linklaters. 

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Africa-focused infrastructure investment funds have set record fundraising targets in 2021, according to new analysis by global law firm Linklaters. 

A total of ten funds have set a combined target of $2.14bn in their latest fundraising, a marked increase on previous years and over three times the average annual amount targeted over the last ten years. 

Andrew Jones, Partner and Head of Linklaters’ Africa Group, said: “Whilst there is some way to go to meet Africa’s infrastructure shortfall, the record target set this year points to a shift in the right direction for future investment levels.”

According to the findings, this year has seen the largest number of newly formed funds that will specifically target Africa’s infrastructure needs - at ten, up from an average of four per year over the last decade.

The analysis suggests that African nations are likely to see high levels of infrastructure spending in the years to come. 

Fund managers have accrued record levels of dry powder at $2.1bn, up $700m compared to 2020. 

Any future investments by funds would add to their combined $9.2bn worth of assets currently under management.

In terms of deal-making activity, infrastructure funds have been deploying significant levels of capital across Africa this year. 

A total of 14 deals took place in the first half of the year, with the majority in South Africa (9), followed by Namibia (2), Egypt (1), Ghana (1) and Mozambique (1).

The proportion of green assets acquired by infrastructure funds out of their overall deal-making is also the second highest since 2015, highlighting the growing appetite for investments which will assist in the climate transition on the continent. 

A majority, 12 (86%) of the 14, of the infrastructure deals by Africa-focussed funds in the first half of this year were of green assets, such as renewables, energy storage, battery technology and low-carbon transportation.

“The face of infrastructure investment in Africa is changing. We’re seeing a greater focus on green investments by funds who are keen on responding to the urgency of the climate transition,” Jones said.

The investors into Africa’s infrastructure-focussed funds are predominantly development banks, alongside African and European pension funds. 

Some of the most notable institutional investors include Government Employees Pension Fund (GEPF), Africa's largest pension fund; CDC Group, the UK's development finance institution; and The African Development Bank.

Robert Cleaver, Corporate Partner at Linklaters, said: “We may start to see a readjustment of investment strategy towards certain sectors post-pandemic, such as healthcare and digital infra. However, core infrastructure financing continues to be a crucial factor in driving economic growth across the continent.”

“As the data suggests, institutional investors are increasingly alive to the opportunities available and we expect them to continue to deploy significant capital in a range of exciting projects over the coming decade,” he said.

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