African Infrastructure Investment Managers (AIIM) has announced the final close of its third African infrastructure investment fund (AIIF3) having raised $320 million, targeting Nigeria and East Africa.
AIIM Director, Paul Frankish told The Africa Report where the fund sees the most promising opportunities.
The growing risks attached to investing in developed country infrastructure are prompting renewed investor interest in African projects.
Inflows into private markets for developed country infrastructure have resulted in valuations close to those of 2007, with investors being forced into riskier, non-core assets to generate returns, Declan O’Brien and Alex Leung of UBS Asset Management argued in April.
The risk of further correction in public markets is a further headwind to private infrastructure investment, the UBS piece said.
African infrastructure investment has grown beyond its development finance origins, with final closes for Africa-focused infrastructure funds over the last five years averaging $233 million annually, Frankish says. AIIF3 will be targeting the power, transport and midstream energy sectors where AIIM sees the greatest disconnect between the demand for critical infrastructure and available capital.
More than half of the fund is already committed to assets across the thermal power, renewable energy, ports and logistics and airports sectors.
Frankish sees strong opportunities in the off-grid power sectors in Nigeria and east Africa.
AIIM says that at full generation its projects will generate 13 per cent and 27 per cent of on-grid generation in Nigeria and Mali, and 17 per cent of Ghana’s on-grid capacity.
The mid-stream energy in west Africa and transport in east Africa is also attracting the fund’s interest.
The fund has concluded deals in Mali, Cote d’Ivoire and the Republic of the Congo and is in advanced discussions on projects in Benin and Burkina Faso.