Pan-African infrastructure fund eyes final close at $400m

An African Development Bank private equity fund plans a fourth and final fund raising in June, as more financiers allocate capital to infrastructure projects on the continent.

The Africa50 Infrastructure Acceleration Fund had raised $300 million by the end of its third close in December and seeks to add $100 million in the final round, Chief Executive Officer Sérgio Pimenta said in an interview.

“We’re really focusing on leveraging the resources that are available on the continent, the funds that these institutions are mobilising, bring them to our fund and deploy them on the continent to support long-term infrastructure needs,” he said.

Africa’s infrastructure challenge is shifting from raising capital to deploying funding in projects that support trade, industry and long-term economic growth on the continent, according to the Africa Finance Corp. The pool of domestic financial resources held by banks, pension funds, insurers and sovereign institutions now stands at $4 trillion, the pan-African lender said in a report.

The capital raised by AfDB’s Africa50 IAF was mobilised from 24 investors, including pension funds, sovereign wealth funds, insurers, commercial banks, and development finance institutions such as the Development Bank of South Africa and the Arab Bank for Economic Development in Africa. One of two non-African investors is a family office.

“On the final close, we will bring a few more international or global players because they can complement very well what African investors can bring in terms of diversification, in terms of knowledge, and in terms of helping us apply international standards,” Pimenta said.

The IAF could potentially invest in a pipeline of projects estimated at $1 billion, he said.

A year ago, IAF signed an agreement to acquire a stake in Mass Céréales al Maghreb, a bulk grain handling and port logistics firm in Morocco, marking its first investment.

“Once we have deployed the funds that are under this vehicle, we will start a second fund with the same mandate, learning on the experience of the first one, and we’ll do a second one, and then a third one, and so on,” Pimenta said.

IAF will invest in equity and quasi-equity in infrastructure companies and projects in Africa, focusing on power and energy, transportation and logistics, water and sanitation, and digital and social infrastructure.

Africa50 is a pan-African infrastructure investor and multi-asset manager created by 33 governments and four development finance institutions to accelerate infrastructure development.

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