Since inception, AIIM has raised more than US$4bn over eight funds and executed more than 70 transactions in target pan-African markets. (Image source: Adobe Stock)

African Infrastructure Investment Managers (AIIM), Africa’s largest dedicated sustainable infrastructure equity manager, has announced the final close of its fourth pan-African infrastructure fund which achieved its hard cap, with US$748mn raised

The African Infrastructure Investment Fund 4 (AIIF4) raised the funding from a diverse investor base across Africa, Europe, Canada, US, Middle East and Asia with an additional US$206mn approved for co-investments alongside the fund.

According to AIIM, in doing so the fund has exceeded its target by 50% with more than half of the capital coming from new investors. This has been taken as a demonstration of the strong show of support for the Fund’s thematic strategy, its team and regional experience, and its high-quality cornerstone portfolio.

AIIM has indicated that through the AIIF4 mandate, the organisation is doubling down on its commitment to tackling climate change by setting decarbonisation and energy efficiency goals and maximising emissions avoidance opportunities through renewable energy deployment for each investment. The Fund is also a 2X Challenge Fund through AIIM’s strategies to enhance gender diversity across its investment teams and the management teams across portfolio companies.

“Given the challenging global fundraising environment, we are delighted to have outperformed the targeted fund size,” remarked Paul Frankish, AIIM’s head of strategic initiatives. “We received strong support from our existing investor base with a high level of re-ups from the supporters of our previous mandates which served to anchor the fundraising. We have also seen many new investors seeking to diversify their investment allocations into new markets which they consider provide strong long-term growth potential, as well as seeking investments with well-defined sustainability and impact strategies.

“These investors have all sought to enter Africa, as a new market with high growth and impact potential, alongside AIIM due to our long track record in the region and strong on-the-ground local presence.”

Olusola Lawson, AIIM's managing director and co-CEO, added, “In developing the strategy we have focused on key themes which provide investors with long-term growth driven by structural deficits and secular tailwinds rather than volatile macro-economic cycles. This includes digital infrastructure, to capitalise on the surge in data consumption across the continent; energy transition, to address the chronic shortage of affordable power and the associated productivity losses for Africa’s corporates; and transport, ports and logistics, to meet the demands for moving goods and people through the world’s most rapidly urbanising cities. All investments by the fund are specifically tracked against climate, gender and governance objectives.”

Earlier in the year, AIIM achieved financial close on two wind farms in South Africa to supply renewable energy for Rio Tinto’s operations. Click here to learn more.

Bank One provides a wide range of banking products and services to its clients through a geographic footprint spread across the island of Mauritius. (Image source: Bank One)

According to Bank One, a joint venture between CIEL Finance Limited and I&M Group PLC, Mauritius could become a conduit for project funding into sub-Saharan Africa by forming a league with financial institutions in the Middle East

The Bank has adopted a long-term strategy to expand its footprint and position itself as ‘Africa’s preferred gateway’. In order to do so, and unlock the massive deal flows on the ground to sustain economic growth in the region – which it stated are “definitely” there – the organisation met with key financial sector players in the Gulf.

“At Bank One, we were recently privileged to meet with key players from the Gulf region and explore the financial landscape in the Middle East through an expert eye,” remarked Thavin Audit, deputy head of corporate and investment banking at Bank One. “This has helped the Bank One leadership team form a nuanced view of what this region means to us, and we are keen to impart insights to other banks or financial institutions who would like to explore this region. Indeed, we view collaboration among various financial sector stakeholders as key to realising the potential of the Mauritius-Middle East partnership.”

From the insights gleaned at the meetings, bank representatives believe the time is now ripe for Mauritius to explore deeper affiliations with financial institutions across the Middle East to best leverage opportunities and support sub-Saharan Africa.

“While Middle Eastern banks have traditionally been engaged in offering Sharia-compliant products, the excess liquidity such banks are currently encountering has substantial implications for their involvement in syndication and trade finance deals. Indeed, Emirati banks have lately been beating Wall Street at its own game, with a 10-year US$3.25 billion loan having been syndicated by regional banks to finance an impactful education sector deal for Dubai’s GEMS. When a consortium led by Canadian fund manager Brookfield was looking for funding for one of the largest private school operators on the planet, it was four Gulf banks who confidently stepped in to help” added Audit.

With Africa home to 11 out of the world’s 20 fastest growing economies in 2024 (according to the African Development Bank), the continent is fertile ground for syndication deals. Meanwhile, the Middle East is the world’s fastest-growing regional market in terms of banking and capital market sectors. At a broader level, reports abound that Gulf banks presently have more liquidity in comparison with many of their foreign peers mainly due to the higher interest rates in Europe and further afield. As such, they face a pressing necessity to match funding to projects and transactions that constitute economic and geographic diversification. However, Emirati banks looking at emerging economies such as those in Africa need to partner with other banks that have the competence, skill, access, and knowledge of the hopeful continent.

African industries in focus

According to Bank One, there is a concentration of deals primarily focused on the oil and gas sector, as well as wider infrastructure.

In the case of the former, oil and gas has immense potential on the continent with reserves nearly equivalent to the US. Once a discovery is made, however, the biggest challenge for African governments and commercial partners is finding sources of finance to develop projects.

In the latter, the pace of infrastructure development in Africa is beginning to increase based on rising deals in transport, energy and telecommunications. As such, there is a huge demand for funding in those areas with AfDB estimating between US$130bn and US$170bn will be required each year to meet infrastructure needs.

Mauritius to take a leading role

This promising environment is a formidable opportunity and Bank One identified a number of developments which is playing into this space.

First, in February 2024, the UAE was removed from the grey list after two years of being on the FATF’s radar, signifying its commitment to combatting money laundering and terrorist financing. This development is likely to boost investor confidence in the UAE's regulatory framework, and it is expected that this move will be accompanied by greater foreign capital inflows and reduced compliance costs and costs of borrowing. Bank One has welcomed this development and has seen Middle Eastern banks confidently looking to channel funding into Africa.

Second, there are promising talks of key DFIs joining forces with financial institutions in the Middle East. Recently, the AfDB, European Investment Bank (EIB), and the OPEC Fund for International Development (OFID) announced support for the African Capitalization Fund, a new private equity fund to be created by the IFC’s Asset Management Company (AMC). The Fund will seek to capitalise on systemically important private sector commercial banking institutions in Africa to spur economic recovery and job creation. The Abu Dhabi Fund for Development (ADFD) also announced that a commitment to the fund is under due consideration.

Finally, systemic efforts are being made to stimulate investments from the Middle East to Africa. With a Comprehensive Economic Partnership Agreement being signed between Mauritius and Dubai which was announced in December 2023 as the first of its kind between the Emirates and an African country. Bank One is keen to explore the full potential of the agreement which is expected to pave the way for increased trade, investment, and private-sector cooperation between the countries.

The launch was marked at the Sun Boardwalk Convention Centre. (Image source: Nelson Mandela Bay Business Chamber)

The Nelson Mandela Bay Business Chamber has launched the Trade and Investment Desk in a bid to position the metro as a diversified manufacturing investment destination and exports hub for Africa

The Desk, in partnership with global auditing, advisory & tax leaders BDO South Africa, global financial services leader Rand Merchant Bank (RMB) and the Eastern Cape Development Corporation (ECDC), is a key driver in the Business Chamber’s strategy to unlock the economic potential of Nelson Mandela Bay to attract and foreign direct investment and enable job creation.

The positioning of the metro as the Bay of Opportunity is aimed to utilise its unique advantages as a two-port city with a strong manufacturing base. This is according to Chamber chief executive Denise Van Huyssteen, who continued, “The Trade and Investment Desk is a strategic driver in bringing this vision to life, working as a united business community along with our partners and key role-players in the trade and investment space to market the Bay as an investment destination of choice and secure catalytic projects that will drive growth.

“The launch of the Desk is a major step forward in resurging the Bay and setting up the local economy for growth and diversification amid massive global advances in technology, new energy and the need for climate resilience. In parallel, as the Chamber is working to improve the enabling environment for business, it is critical that we are proactive in building investor confidence in the advantages of the Bay, and providing support to retain and attract investors.”

Viable new business opportunities

The Trade and Investment Desk will lead on the marketing of Nelson Mandela Bay as an investment destination to secure partnerships with key trade and investment stakeholders. It will also support potential investors with economic data, local information and networking while facilitating trade and export opportunities for local businesses. Moreover, it will support the Chamber’s Local Economy Reinvention Think Tank.

Bonga Mokoena, BDO South Africa CEO, commented, “I believe that as partners, we are aligned in our vision of unlocking economic growth. The Chamber’s Trade and Investment Desk, founded on global investment promotion best practice, will be an important lever in our collective vision and create much needed opportunities for the people, businesses and communities of Nelson Mandela Bay and South Africa at large.”

“Nelson Mandela Bay is the largest commercial centre in the Eastern Cape, an anchor for large-scale trade, investment and tourism, and the automotive manufacturers in the Bay are the largest contributor to provincial manufacturing output and trade,” added, ECDC chief executive Ayanda Wakaba. “It stands to reason that the metro and the Chamber are key partners for the province in economic development.”

BII announces a U$20m loan to TerraPay to enhance low-cost, high-speed remittance transfers to Africa, promoting financial inclusion and economic opportunities. (Image source: Adobe Stock)

British International Investment (BII), the UK's development finance institution (DFI) and impact investor, has announced a US$20mn senior secured loan to TerraPay, a global cross-border payments processor that focuses on remittance transfers into Africa

This investment aims to lower costs, increase speed, and enhance the reliability and accessibility of remittance transfers into the continent, thereby improving financial inclusion.

Lowering remittance costs

Sub-Saharan Africa has the highest remittance costs globally, with an average cost of 8% for sending US$200 in 2022, compared to the global average of 6.2%. This cost is more than double the Sustainable Development Goal target of 3%, according to the World Bank.

TerraPay's network connects traditional money transfer operators, such as Western Union, and digital-only fintechs like Wise, with major mobile money operators in Africa, including M-Pesa, MTN Mobile Money, and Airtel Mobile Money. Its technology-enabled model facilitates real-time, lower-cost digital money transfers, addressing the issues of high transfer fees and slow settlements for the African diaspora.

BII's funding will be used as part of TerraPay's working capital to pre-fund increasing remittance volumes to Africa. The funding will prioritise key African corridors, with high volumes expected in Kenya, Ghana, Egypt, Uganda, Tanzania, Cameroon, Mali, Benin, Cote d’Ivoire, Senegal, and Mozambique.

BII is committing through Lendable's existing senior secured facility, leveraging the partner's expertise in fintech debt investing across Africa and their investment monitoring capabilities.

Chris Chijiutomi, managing director and head of Africa at BII, stated, "Sending money to Africa is expensive. That is why our investment in TerraPay is critical to help increase availability of lower-cost, efficient, accessible, and reliable remittances. This aligns with our goal to support resilient financing and improve economic opportunities on the continent."

Suresh Samuel, managing director and head of fintech at Lendable, added, "We have been supporting TerraPay since 2020, as the company accelerated its growth facilitating remittances across emerging markets. We continue to believe in the importance of increasing digital payments globally and are excited to work with BII in furthering support to TerraPay to expand this mandate."