Pan African Infrastructure Development Fund (PAIDF)-AfDB Group Proposes US$ 50 Million Investment in PAIDF
Tunis, 25 April 2007 – The African Development Bank (AfDB) has teamed up with major African investors to generate up to US$ 450 million in the first instance to finance a Pan-African Infrastructure Development Fund (PAIDF), a close-end private equity fund that will invest in infrastructure projects in the Energy, transport, ICT, water and sanitation sectors.
The Bank will contribute US50 million to the fund and another US$ 1 million to the management of the fund which was approved by the Board of Directors on Wednesday in Tunis.
The Fund’s objective is to invest directly in infrastructure projects in all regions of Africa as well as investments in securities of companies that own, control, operate or manage infrastructure and infrastructure-related assets. It may also participate in joint ventures with corporate and governmental partners.
"The sound expertise of the individual team members, the choice of strategic relationships with reputable Banks like DBSA and ADB, and the substantial requirement for investments in infrastructure in Africa bring a compelling opportunity to generate attractive risk-adjusted returns. In addition to financial return objectives, the Fund will invest only in infrastructure projects with a favorable economic and social impact on the populations and which respect good governance and transparency standards," the project report says.
The PAIDF will focus on very large scale investments where it can make equity investments of US$ 25–120 million. From the investment perspective, the PAIDF’s investments of US$ 1 billion over 8 years are expected to catalyze additional investments for physical infrastructure of US$ 9–14 billion.
The PAIDF is a 15-year limited-life company that will be registered in Mauritius. At the first closing, its capital should be US$ 450 million. The potential Shareholders are reputable public and private pension’s funds and asset management firms.
List of potential investors are:
- The Public Investment Corporation (PIC), which is the biggest pension fund in Africa with assets under management exceeding US$ 90 billion, the key being the Government Employees Pension Fund (GEPF). It also ranks among the world’s top 10 largest public pension Fund managers.
- PIC manages equities which accounted for approximately 10% of Johannesburg Stock Exchange (JSE) market capitalization. The Corporation is the chief sponsor of PAIDF.
- The two other co-sponsors are DBSA and the Bank which are premier DFIs in Africa with wide experience in private equity issues.
- Sanlam, a leading financial service group in South Africa, listed in the JSE, with more than US$ 50 billion under management.
- Eskom Pension & Provident Fund (EPPF) and Metropolitan are both reputable and highly regarded South African pension funds.
The Fund is seen as a real lever for mobilizing investment funds in the priority sectors of African economies which include infrastructure, finance and agribusiness. By 2015, the fund is expected to mobilize investments to the tune of US$9 billion to US$14 billion in various economic sectors. According to the investment plans, the Fund will contribute to the creation of some 50,000 jobs.
The PAIDF is expected to open at least 2 regional offices with full authority in the North, West and East regions, less than 2 years after the first closing. ADB and DBSA will have a veto in the Investment Committee and will participate in the selection of its independent members.
The PAIDF will be managed by the PAIDF Management Company. The DBSA and the ADB will each be entitled to at least a 10% shareholding in the Management Company. The management Team will own 40% of the PAIDF Management Company and the balance will be held by the PIC.
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