African infrastructure investor and private equity fund manager, African Infrastructure Investment Managers (AIIM), has announced the completion of a capital increase of ZAR5.5bn (c.USD370m) for its flagship SADC infrastructure fund, the IDEAS Managed Fund (IDEAS). The fundraise exceeds the initial ZAR4.5bn (USD301m) target by 20%, taking the size of the open-ended fund to more than ZAR22bn (USD1.475bn).
The IDEAS fund strategically targets investment in renewable energy with a 75% allocation to investments in the sector. These investments contribute around 25% of the clean energy supplied to South Africa’s grid, offsetting 3.7 million tCO2 equivalent in 2020 and powering the equivalent of 1.1 million households with clean energy. This has positioned AIIM and IDEAS as key players in South Africa’s clean energy transition and aligns to global support for climate change mitigation strategies.
Commenting on the success of the fundraise, AIIM co-Managing Director Vuyo Ntoi said, “The strong support from existing and new investors is indicative of investors’ confidence in AIIM and IDEAS’ investment mandate. The market has reached an inflection point with public policy support catalysing healthy deal flow and increasing private sector investor appetite.”
Pension funds investors into infrastructure
The new commitments were secured from 19 key South African institutional and pension fund investors, with two thirds of the capital being committed by new investors to the Fund. The investor appetite capitalised on recent interest in the alternative assets and expected amendments to Regulation 28 anticipated to support an increased allocation to infrastructure assets from the South African pension industry.
IDEAS will deploy the capital in line with the fund’s existing mandate, providing investors with exposure to a diversified portfolio of sustainable infrastructure assets across the SADC region. The current fundraising has been concluded to support the deployment of an active pipeline of assets across the power, digital infrastructure and transport sectors, over the next three years, underpinned by long-term economic and environmental sustainability goals.
The IDEAS Fund has invested in a diversified portfolio of more than 40 assets in South Africa that are involved in the delivery of key services in the transport, power, digital and social infrastructure sectors. This approach has proven successful to date, with IDEAS consistently outperforming the target returns of CPI+ 7% since inception in 1999.
AIIM says its ESG and impact management systems provide investors with an opportunity to contribute to the UN Sustainable Development Goals and South Africa’s development goals.
AIIM’s SADC Chief Investment Officer, Sean Friend, noted, “The pandemic has reinforced the strength of infrastructure as an attractive long-term asset class, in the face of market volatility. All our portfolio assets remained operational during this period, resulting in strong performance and being able to outperform most other asset classes. In addition to delivering compelling risk-adjusted returns, the portfolio supported more than 4,000 direct jobs throughout the pandemic, and we are pleased to have been able to play a part in South Africa’s long-term economic recovery and ongoing development.”