preqin special report: the infrastructure market in africa...africa have secured half of aggregate...

Content Includes:

Fundraising

Managers based outside Africa have secured half of aggregate capital commitments for Africa-focused funds since 2007.

Deal Flow

Since 2007, 282 infrastructure deals have been completed in Africa, worth an estimated $108bn.

Source of Allocation

The majority of Africa-based institutional investors in infrastructure have a dedicated allocation to the asset class.

Investors’ Plans

A look at Africa-based institutional investors’ infrastructure investment plans in the next 12 months.

Preqin Special Report: The Infrastructure Market in Africa

August 2016

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2 © 2016 Preqin Ltd. / www.preqin.com

Preqin Special Report: The Infrastructure Market in AfricaDownload the data pack:www.preqin.com/INFAF16

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Foreword

Contents

Deal Flow 3

Africa-Focused Fundraising 5

Global Funds Investing in Africa 8

Africa-Based Investors 9

Global Investors Targeting Africa 11

Insufficient infrastructure is widely recognized as one of the key challenges facing Africa and one of the major obstacles to the continent’s economic development. Addressing the funding gap for infrastructure projects has become a priority of governments and international organizations in recent years; institutional investors and fund managers have also come to play an important role in providing finance for new infrastructure projects.

Preqin’s Infrastructure Online database tracks 282 infrastructure deals completed in African countries since 2007, representing $108bn in estimated aggregate deal value. The unlisted fundraising segment focused on making infrastructure investments primarily in Africa is relatively small, with only 24 funds reaching a final close since 2007, raising $4.6bn collectively from institutional investors. While fundraising solely targeting Africa is small, unlisted infrastructure fundraising is bolstered by significant sums of capital from fund managers that include Africa as part of a wider geographic focus.

Africa has also become an increasingly important centre for institutional investment in infrastructure: Preqin tracks 57 Africa-based institutional investors in infrastructure, over half of which have a separate allocation to the asset class. Fund managers seeking capital for Africa-focused opportunities can also look to a greater number of investors globally that have a preference for the region, representing a considerable $11tn in combined assets under management.

Preqin’s Infrastructure Online is the leading source of intelligence on the infrastructure industry. We hope you find this report useful and welcome any feedback you may have. To find out more about Infrastructure Online and Preqin’s other services please visit www.preqin.com or contact [email protected].

Key Facts

57Number of Africa-based infrastructure investors tracked by Preqin’s Infrastructure Online.

60%Proportion of African infrastructure deals completed since 2013 directed towards energy infrastructure.

$4.6bnAggregate capital raised by the 24 unlisted Africa-focused infrastructure funds closed since 2007.

$108bnEstimated aggregate deal value of the 282 African infrastructure deals completed since 2007.


3© 2016 Preqin Ltd. / www.preqin.com

Preqin’s Infrastructure Online database features information on over 14,200 completed infrastructure deals, including 282 deals completed in Africa since 2007. Deal flow reached its highest level in 2012, with 50 deals completed for an estimated $16.4bn; despite deal flow dropping off into 2013, aggregate deal value continued to rise, reaching a record $20bn in the same year (Fig. 1).

Fourteen transactions have been completed in 2016 so far, with an estimated aggregate deal value of $8.6bn. This includes the successful €1bn bid by Enel Green Power, Nareva Holding and Siemens Wind Power to construct and operate 850 MW of wind farms across five sites in Morocco.

Since 2013, African infrastructure deals have been concentrated in Southern (30%) and Western (27%) Africa, with fewer deals in the Eastern (20%), Northern (16%) and Central (7%) regions (Fig. 2). Due to shortfalls in existing infrastructure in many African countries, a much larger proportion of these deals are in new projects compared with more developed regions: 70% of African infrastructure deals completed since 2013 have been for greenfield projects, 24% for secondary stage and 6% for brownfield projects (Fig. 3). In contrast, 65% of UK deals since 2013 have been for secondary stage projects and only 27% for greenfield (for more information, please see Preqin’s factsheet The UK Infrastructure Market - May 2016).

The majority (60%) of African deals since 2013 have been for energy infrastructure (Fig. 4). Of these, the largest proportion have been for renewable energy assets, particularly solar (51% of energy deals) and wind power (23%). Outside the energy sector, the largest proportions of deals have been for utilities and transport assets (21% and 11% respectively).

Approximately two-thirds of deals completed since 2013 have been valued at under $500mn, with 22% between $500mn and $1bn and 11% at least $1bn in size (Fig. 5).

30

22 2024

33

50

39

25 25

14

0

5

10

15

20

25

0

10

20

30

40

50

60

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016YTD

No. of DealsReported Aggregate Deal Value ($bn)Estimated Aggregate Deal Value ($bn)

Fig. 1: Number and Aggregate Value of Completed African Infrastructure Deals, 2006 - 2016 YTD (As at 7 July 2016)

Source: Preqin Infrastructure Online

No

. of

De

als

Fig. 2: Completed African Infrastructure Deals by Sub-Region, 2013 - 2016 YTD (As at 7 July 2016)

NorthernAfrica16%

WesternAfrica27%

EasternAfrica20%

SouthernAfrica30%

CentralAfrica

7%

70%

6%

24%

Greenfield

Brownfield

Secondary Stage

Fig. 3: Completed African Infrastructure Deals by Project Stage, 2013 - 2016 YTD (As at 7 July 2016)



Ag

gre

ga

te D

ea

l Va

lue

($bn

)

Deal Flow



25%

42%

22%

11%

Less than $100mn

$100-499mn

$500-999mn

$1bn or More

Fig. 5: Completed African Infrastructure Deals by Transaction Value, 2013 - 2016 YTD (As at 7 July 2016)


Data Source:

Preqin’s Infrastructure Online contains detailed information on more than 14,200 completed infrastructure deals including investors, fund managers, asset type, industry and much more.

For more information, or to arrange a demonstration, please visit:

www.preqin.com/infrastructure

Fig. 6: 10 Notable African Infrastructure Deals Completed, 2013 - 2016 YTD (As at 7 July 2016)

Asset Location Investor(s) Deal Date Industry Deal Size (mn)

Batoka Gorge Hydroelectric Project Zambia African Development Bank, Unidentified

Investor(s) Jun-13 Hydropower 2,800 USD

Safi Coal-fired Power Plant Morocco Engie, Mitsui & Co - Corporate Development Business Unit, Unidentified Investor(s) Sep-13 Power Plants 2,600 USD

Lekela Power South Africa Actis, Mainstream Renewable Power Feb-15 Renewable Energy 1,900 USD

Lusulu Power Plant Zimbabwe PER Lusulu Power Jul-15 Power Plants 1,100 USD

850MW Morocco Wind Power Project Morocco Enel, NAREVA Holding, Siemens AG Mar-16 Wind Power 1,000 EUR

Nachtigal Falls Hydroelectric Dam Cameroon EDF Group, International Finance Corporation

(IFC), Unidentified Investor(s) Nov-15 Hydropower 1,000 USD

Xina Solar Power Plant South AfricaAbengoa, Industrial Development Corporation,

Public Investment Corporation, Unidentified Investor(s)

Jun-14 Solar Power 908 USD

Lake Turkana Wind Power Project Kenya

Aldwych International, Finnfund, IFU, KP&P Africa, Netherlands Development Finance Company (FMO), Vestas Wind Systems

Mar-14 Wind Power 870 USD

Laúca Hydroelectric Transmission Line Angola Odebrecht Nov-15 Power Distribution 797 USD

Azura-Edo IPP Nigeria

African Infrastructure Investment Managers, Aldwych International, Amaya Capital Partners, American Capital Energy & Infrastructure, ARM-Harith Infrastructure Investments, Unidentified

Investor(s)

Mar-14 Power Plants 750 USD


21%

11%

5%

2% 1%

51% 23%

11%

8%5%2%

60%

Fig. 4: Completed African Infrastructure Deals by Industry, 2013 - 2016 YTD (As at 7 July 2016)


Energy

Energy Solar PowerUtilities Wind PowerTransport HydropowerTelecoms Energy (Excl. Renewable)Social Diversified Renewable EnergyOther Biomass/Biofuel Facility



Twenty-four funds with a primary geographic focus on Africa* have closed since 2007, raising a combined $4.6bn in institutional capital commitments (Fig. 7). Two-thirds of these funds are managed by Africa-based firms, including 42% that are managed by South Africa-headquartered firms (Fig. 8). However, despite representing only a third of the

overall number of funds closed, non-Africa-based managers account for approximately half of aggregate capital raised during this period.

Recent Africa-focused fund closures include Meridiam Infrastructure Africa Fund, which has raised €300mn to invest in public-private partnership

opportunities across economic and social infrastructure, and Berkeley Energy’s African Renewable Energy Fund, which will invest $200mn in grid-connected development stage renewable energy projects across Sub-Saharan Africa (Fig. 9).

4

2

7

6

5

0.6

1.40.9 0.9 0.8

0

1

2

3

4

5

6

7

8

2007-2008 2009-2010 2011-2012 2013-2014 2015-2016YTD

No. of FundsClosed

AggregateCapital Raised($bn)

Fig. 7: Annual Africa-Focused* Unlisted Infrastructure Fundraising, 2007 - 2016 YTD (As at 7 July 2016)


Fig. 9: Five Notable Africa-Focused* Unlisted Infrastructure Funds Closed, 2013 - 2016 YTD (As at 7 July 2016)

Fund Firm Headquarters Final Close Date

Fund Size (mn)

InfraMed Infrastructure InfraMed Management France May-13 385 EUR

Meridiam Infrastructure Africa Fund Meridiam France Oct-15 300 EUR

Vantage GreenX Debt Fund Vantage Risk Capital South Africa Nov-13 2,160 ZAR

African Renewable Energy Fund Berkeley Energy UK Sep-15 200 USD

Convergence Partners Communications Infrastructure Fund Convergence Partners South Africa Jun-15 200 USD


Year of Final Close

*Funds with a primary geographic focus on or substantial investment in Africa (excl. geographically diversified funds with exposure to African infrastructure).

33%

50%

25%

8%

42% 42%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

No. of FundsClosed

Aggregate CapitalRaised

South Africa-Based Managers

Rest of Africa-Based Managers

Non-Africa-Based Managers

Fig. 8: Africa-Focused* Unlisted Infrastructure Fundraising by Fund Manager Headquarters, 2007 - 2016 YTD (As at 7 July 2016)


Fig. 10: Five Notable Africa-Focused* Unlisted Infrastructure Funds in Market (As at 7 July 2016)

Fund Firm Headquarters Target Size (mn)

COMESA Infrastructure Fund PTA Bank Burundi 1,000 USD

Pan African Infrastructure Development Fund II Harith South Africa 1,000 USD

Pembani Remgro Infrastructure Fund Pembani Remgro Infrastructure Managers South Africa 400 USD

ARM-Harith Infrastructure Fund ARM-Harith Infrastructure Investments Nigeria 250 USD

New Sparta Africa Power Fund New Sparta Asset Management UK 250 USD


Africa-Focused Fundraising

Pro

po

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n o

f To

tal

Investor Analyst: The True Perspective

See how investors measure up...

Leveraging Preqin’s detailed investor data, Investor Analyst allows you to generate custom visual reports comparing an investor’s allocations, preferences and investment plans against a tailor-made peer group:

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Global Funds Investing in AfricaThe unlisted infrastructure fundraising environment focused exclusively on Africa is relatively small (see page 5); however, there are many infrastructure funds closed that operate with a globally diversified investment remit that may include Africa as part of a wider geographic focus.

As can be seen in Fig. 11, these global funds account for the vast majority of the funds closed and aggregate capital

raised that could target investment in Africa. Solely Africa-focused funds represent on average 17% of funds closed since 2007 and only 6% of the aggregate capital raised. In total, 115 vehicles have reached a final close since 2007 that have a global investment remit, securing $102bn in capital commitments, with the greatest levels of capital raised in 2013 and 2016 so far (Fig. 12). Large and experienced infrastructure firms are able to attract vast sums of capital

for their global funds, with Brookfield Asset Management’s vehicles major contributors to these totals, securing $7bn and $14bn for Fund II and III respectively (Fig. 13).

There are currently 44 unlisted funds on the road with a globally diversified focus, collectively targeting $35.7bn in capital, including Global Infrastructure Partners III, which is seeking $12.5bn (Fig. 14).

88% 89%

77%84%

75%

97%

83%

96% 96% 98%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2007-2008 2009-2010 2011-2012 2013-2014 2015-2016YTD

No. of Funds Closed Aggregate Capital Raised ($bn)

Fig. 11: Global Unlisted Infrastructure Fundraising as a Proportion of All Fundraising* Targeting Investments in Africa, 2007 - 2016 YTD (As at 21 July 2016)


10

18

89

8

15

19

13

11

4

8.3

12.0

3.7 3.2

7.6

13.9

18.4

4.0

12.7

18.4

0

2

4

6

8

10

12

14

16

18

20

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016YTD

No. of Funds Closed Aggregate Capital Raised ($bn)

Fig. 12: Annual Global-Focused Unlisted Infrastructure Fundraising*, 2007 - 2016 YTD (As at 21 July 2016)


Fig. 13: Five Notable Global Unlisted Infrastructure Funds* Closed, 2013 - 2016 YTD (As at 21 July 2016)

Fund Firm Headquarters Fund Size (mn)

Final Close Date

Brookfield Infrastructure Fund III Brookfield Asset Management Canada 14,000 USD Jul-16

Brookfield Infrastructure Fund II Brookfield Asset Management Canada 7,000 USD Oct-13

EIG Energy Fund XVI EIG Global Energy Partners US 6,000 USD Dec-13

Westbourne Capital Infrastructure Debt Fund Program 1 Westbourne Capital Australia 4,800 AUD Feb-15

North Haven Infrastructure Partners II Morgan Stanley Infrastructure US 3,600 USD Mar-16


Fig. 14: Five Notable Global-Focused Unlisted Infrastructure Funds* in Market (As at 21 July 2016)

Fund Firm Headquarters Target Size (mn)

Global Infrastructure Partners III Global Infrastructure Partners US 12,500 USD

Carlyle Energy Mezzanine Opportunities Fund II Carlyle Group US 2,500 USD

Global Infrastructure Partners Capital Solutions Fund Global Infrastructure Partners US 2,500 USD

Bastion Infrastructure Fund I Bastion Infrastructure Group Canada 2,000 USD

IDB Infrastructure Fund II ASMA Capital Partners Bahrain 2,000 USD


Pro

po

rtio

n o

f To

tal

Year of Final Close Year of Final Close

*Includes funds that may have exposure to Africa.



Preqin’s Infrastructure Online currently tracks 57 Africa-based institutional infrastructure investors. Of these banks/investment banks and investment companies together comprise the majority, each accounting for 19% of Africa-based investors, while public and private sector pension funds make up a smaller proportion of the investor pool than is typical in more developed markets

(Fig. 15). Furthermore, over half (53%) of these institutions have less than $5bn in assets under management, with 10% holding $50bn or more (Fig. 16).

The majority (53%) of Africa-based institutional investors in infrastructure have a separate allocation to the asset class (Fig. 17). A further 23% invest in the asset class from their private equity

allocation, while 10% allocate from their general alternatives allocation.

The largest proportion (69%) of investors make direct investments in infrastructure assets, while a significant proportion (63%) make use of unlisted funds; only 6% of investors invest in listed funds (Fig. 18).

19%

19%

12%12%

11%

9%

9%

4%5%

Bank/InvestmentBank

Investment Company

Insurance Company

Private SectorPension Fund

Public Pension Fund

Asset Manager

Sovereign WealthFund

Wealth Manager

Other

Fig. 15: Africa-Based Institutional Investors in Infrastructure by Type


24%

29%

14%

24%

10%

0%

5%

10%

15%

20%

25%

30%

Less than$1bn

$1-4.9bn $5-9.9bn $10-49.9bn $50bn orMore

Fig. 16: Africa-Based Institutional Investors in Infrastructure by Assets under Management


53%

10%

23%

3%3%

7%

SeparateInfrastructureAllocation

General AlternativesAllocation

Part of Private EquityAllocation

Part of Real AssetsAllocation

Part of OpportunisticAllocation

Other

Fig. 17: Africa-Based Institutional Investors by Source of Infrastructure Allocation


Assets under Management

Pro

po

rtio

n o

f In

vest

ors

63%

69%

6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Unlisted Funds Direct Investment Listed Funds

Fig. 18: Africa-Based Institutional Investors in Infrastructure by Preferred Route to Market


Pro

po

rtio

n o

f In

vest

ors

Route to Market

Africa-Based Investors


Fig 19: Sample Africa-Based Institutional Investors Targeting Unlisted Infrastructure Funds in the Next 12 Months

Investor Location Type Investment Plans in the Next 12 Months

Eskom Pension & Provident Fund South Africa Private Sector

Pension Fund

Planning to invest ZAR 200-400mn in the form of debt and equity across two funds via its South African development allocation. One fund will focus on the renewable energy sector and the second commitment will be to a healthcare- and education-focused social development fund.

Government Institutions Pension Funds - Namibia Namibia Public Pension

FundLooking to invest in further Africa-focused unlisted infrastructure funds in order to reach its 2.5% target allocation to the asset class.

Kenya Pipeline Company Retirements Benefit Scheme Kenya Private Sector

Pension FundWill be investing in domestic unlisted infrastructure funds as part of its general alternative assets allocation.


Data Source:

Preqin’s Infrastructure Online currently tracks 57 institutional investors based in Africa, as well as 124 institutional investors outside the region that have a preference for Africa-focused opportunities.

This includes detailed investor profiles, including current and target allocation to infrastructure, strategy and geographic preferences, future investment plans, previous infrastructure fund commitments and much more.

For more information, or to arrange a demonstration, please visit: www.preqin.com/infrastructure


Find out how Preqin’s Infrastructure Online can help your business:


Source new investors for funds or deals

Identify new investment opportunities

Conduct competitor and market analysis

Search for potential deal partners

Develop new business



Global Investors Targeting AfricaThe unlisted infrastructure market in Africa is still developing, with significant amounts of capital directed to the continent from more geographically diverse funds based in other regions (see page 8). Preqin’s Infrastructure Online contains detailed information on 124 institutional investors globally that have a preference for infrastructure investments in Africa, with the largest proportion (38%) located in the US (Fig. 20). Investors based in United Arab Emirates, China and the UK also make up notable proportions of the investor pool.

When looking at infrastructure investors with a preference for more developed regions, it is typically public pension funds, endowment plans, foundations and private wealth investors that dominate the population; however, due to an unfamiliarity of local markets in Africa, the make-up of investors interested in the region changes. Of the investors with a preference for Africa-focused investment, government agencies represent the largest proportion (17%) of investors, most likely as many are set up with the mandate to invest on the continent (Fig. 21). Private sector pension funds (13%), investment companies (12%) and banks (11%)

also make up notable proportions of institutions with a preference for Africa-focused infrastructure investment.

These investors represent a significant pool of capital available to fund managers targeting Africa-focused investments, with the combined assets under management (AUM) of investors with appetite for Africa reaching $11tn. This is due to some of the largest

institutional investors in the world seeking exposure to Africa-focused infrastructure opportunities: half of investors seeking exposure to Africa have over $10bn in AUM, with the largest proportion (30%) holding $50bn or more in total assets (Fig. 22).

17%

13%

12%

11%11%

7%

7%

6%

16%

Government Agency

Private Sector Pension Fund

Investment Company

Bank/Investment Bank

Public Pension Fund

Corporate Investor

Sovereign Wealth Fund

Family Office

Other

Fig. 21: Global Infrastructure Investors with a Preference for Africa by Type


38%

7%6%6%

5%

4%

4%

4%

26%

US

United Arab Emirates

China

UK

France

Denmark

Japan

Switzerland

Other

Fig. 20: Global Infrastructure Investors with a Preference for Africa by Location


22%

19%

8%

20%

30%

0%

5%

10%

15%

20%

25%

30%

35%

Less than$1bn

$1-4.9bn $5-9.9bn $10.49.9bn $50bn orMore

Fig. 22: Global Infrastructure Investors with a Preference for Africa by Assets under Management


Pro

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f In

vest

ors

Assets under Management

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With global coverage and detailed information on all aspects of the infrastructure asset class, Preqin’s industry-leading Infrastructure Online service keeps you up-to-date on all the latest developments in the infrastructure universe.

Examine infrastructure investment trends

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Preqin Special Report: The Infrastructure Market in Africa

August 2016

preqin special report: the infrastructure market in africa...africa have secured half of aggregate...

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