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Investment firm (AIIM) closes $373.1m to strengthen renewable energy project financing

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Investment firm (AIIM) closes $373.1m to strengthen renewable energy project financing

African Infrastructure Investment Managers (AIIM) has concluded a capital raise of $373,1 million (R5,5 billion) for its IDEAS Managed Fund, which focuses on sustainable energy investments.

AIIM is one of Africa’s largest infrastructure-focused private equity fund managers. The fundraise of $272,1 million (R5.5 billion) exceeds the initial $373.1 million (R4.5 billion) target by 20%, bringing the total size of the open-ended fund to more than $1.49 billion (R22bn).

IDEAS is AIIM’s flagship SADC infrastructure fund, with a strong focus on renewable energy project financing. The members of the SADC Regional Economic Community include: Angola, Botswana, Comoros, Democratic Republic of Congo, Eswatini, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, United Republic of Tanzania, Zambia, and Zimbabwe

IDEAS will use the funds to invest in a wide portfolio of sustainable infrastructure assets across the SADC regions, in accordance with the fund’s existing purpose.

The recent fundraising event was completed to assist the deployment of an operational pipeline of assets spanning the electricity, digital infrastructure, and transportation sectors over the next three years, with long-term economic and environmental sustainability objectives as a foundation.

Through IDEAS, AIIM has historically focused on renewable energy prospects, allocating 75 percent of its investment capital to the industry.

These investments account for about a quarter of the clean energy supplied to South Africa’s grid, offsetting 3.7 million tons of CO2 equivalent in 2020 and providing clean energy to the equivalent of 1.1 million homes. This has established AIIM and IDEAS as essential participants in South Africa’s clean energy transition, aligning with international support for climate change mitigation policies.

IDEAS has invested in a diversified portfolio of over 40 properties that provide critical services in the transportation, power, digital, and social infrastructure sectors. Since its inception in 1999, IDEAS has routinely outperformed the target returns of CPI+7 percent.

AIIM co-Managing Director Vuyo Ntoi said of the fundraise’s success: “The significant support from existing and new investors is evidence of investors’ confidence in AIIM and IDEAS’ investment mandate”.

He stated that with public policy backing catalyzing healthy transaction flow and increasing private sector investor appetite, the market has reached a tipping point. We are grateful for the rising investor base’s confidence in us, and we look forward to working with them to provide long-term infrastructure for South Africa and the region.

Fresh commitments were acquired from 19 significant South African institutional and pension fund investors, with new investors contributing two-thirds of the fund’s capital.

The investor demand was fueled by recent interest in alternative assets and projected changes to Regulation 28 of the Pension Funds Act, which would allow the South African pension industry to boost its allocation to infrastructure assets.

The acknowledgment of infrastructure as a significant asset class in delivering effect throughout an investment portfolio backs this up. AIIM’s well-established ESG and impact management systems are completely incorporated into the investment process, allowing investors to make a visible contribution to the United Nations Sustainable Development Ambitions and, more generally, South Africa’s development goals.

Sean Friend, AIIM’s SADC Chief Investment Officer said: “The epidemic has underlined the solidity of infrastructure as an attractive long-term asset class in the face of market turbulence.” 

He also commented that during this time, all of SADC’s portfolio assets remained operational, resulting in outstanding performance and the ability to outperform most other asset classes.

The portfolio supported approximately 4,000 direct jobs during the epidemic, and SADC is glad to have been able to contribute to South Africa’s long-term economic recovery and ongoing development.

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