Preqin Special Report: The Infrastructure Market in Africa

Transcription

1 Content Includes: Preqin Special Report: The Infrastructure Market in Africa Fundraising August 2016 Managers based outside Africa have secured half of aggregate capital commitments for Africafocused funds since Deal Flow Since 2007, 282 infrastructure deals have been completed in Africa, worth an estimated $108bn. Source of Allocation The majority of Africabased 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. alternative assets. intelligent data.

2 Preqin Special Report: The Infrastructure Market in Africa Download the data pack: Foreword 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 or contact info@preqin.com. Key Facts 57 Number of Africa-based infrastructure investors tracked by Preqin s Infrastructure Online. $4.6bn Aggregate capital raised by the 24 unlisted Africa-focused infrastructure funds closed since % Proportion of African infrastructure deals completed since 2013 directed towards energy infrastructure. $108bn Estimated aggregate deal value of the 282 African infrastructure deals completed since Contents Deal Flow 3 Africa-Focused Fundraising 5 Global Funds Investing in Africa 8 Africa-Based Investors 9 Global Investors Targeting Africa 11 All rights reserved. The entire contents of Preqin Special Report: The Infrastructure Market in Africa, August 2016 are the Copyright of Preqin Ltd. No part of this publication or any information contained in it may be copied, transmitted by any electronic means, or stored in any electronic or other data storage medium, or printed or published in any document, report or publication, without the express prior written approval of Preqin Ltd. The information presented in Preqin Special Report: The Infrastructure Market in Africa, August 2016 is for information purposes only and does not constitute and should not be construed as a solicitation or other offer, or recommendation to acquire or dispose of any investment or to engage in any other transaction, or as advice of any nature whatsoever. If the reader seeks advice rather than information then he should seek an independent financial advisor and hereby agrees that he will not hold Preqin Ltd. responsible in law or equity for any decisions of whatever nature the reader makes or refrains from making following its use of Preqin Special Report: The Infrastructure Market in Africa, August While reasonable efforts have been made to obtain information from sources that are believed to be accurate, and to confirm the accuracy of such information wherever possible, Preqin Ltd. does not make any representation or warranty that the information or opinions contained in Preqin Special Report: The Infrastructure Market in Africa, August 2016 are accurate, reliable, up-to-date or complete. Although every reasonable effort has been made to ensure the accuracy of this publication Preqin Ltd. does not accept any responsibility for any errors or omissions within Preqin Special Report: The Infrastructure Market in Africa, August 2016 or for any expense or other loss alleged to have arisen in any way with a reader s use of this publication Preqin Ltd. /

3 Download the data pack: Preqin Special Report: The Infrastructure Market in Africa Deal Flow Preqin s Infrastructure Online database features information on over 14,200 completed infrastructure deals, including 282 deals completed in Africa since 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 () and Western (27%) Africa, with fewer deals in the Eastern (), 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 $1bn in size (Fig. 5). Fig. 1: Number and Aggregate Value of Completed African Infrastructure Deals, YTD (As at 7 July 2016) Fig. 2: Completed African Infrastructure Deals by Sub- Region, YTD (As at 7 July 2016) No. of Deals YTD No. of Deals Reported Aggregate Deal Value ($bn) Estimated Aggregate Deal Value ($bn) Aggregate Deal Value ($bn) Western Africa 27% Northern Africa 16% Central Africa 7% Eastern Africa Fig. 3: Completed African Infrastructure Deals by Project Stage, YTD (As at 7 July 2016) 24% Greenfield Southern Africa 6% Brownfield 70% Secondary Stage 2016 Preqin Ltd. / 3

4 Preqin Special Report: The Infrastructure Market in Africa Download the data pack: Fig. 4: Completed African Infrastructure Deals by Industry, YTD (As at 7 July 2016) Fig. 5: Completed African Infrastructure Deals by Transaction Value, YTD (As at 7 July 2016) 2% 1% Energy 5% 11% 11% 21% Energy Utilities Transport Telecoms Social Other 60% 51% 23% 11% 5% 8% 2% Solar Power Wind Power Hydropower Energy (Excl. Renewable) Diversified Renewable Energy Biomass/Biofuel Facility 22% 42% 25% Less than $100mn $ mn $ mn $1bn or More Fig. 6: 10 Notable African Infrastructure Deals Completed, YTD (As at 7 July 2016) Asset Location Investor(s) Deal Date Industry Batoka Gorge Hydroelectric Project Safi Coal-fired Power Plant Zambia Morocco African Development Bank, Unidentified Investor(s) Engie, Mitsui & Co - Corporate Development Business Unit, Unidentified Investor(s) Deal Size (mn) Jun-13 Hydropower 2,800 USD 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 Nachtigal Falls Hydroelectric Dam Xina Solar Power Plant Lake Turkana Wind Power Project Laúca Hydroelectric Transmission Line Azura-Edo IPP Morocco Enel, NAREVA Holding, Siemens AG Mar-16 Wind Power 1,000 EUR Cameroon South Africa Kenya EDF Group, International Finance Corporation (IFC), Unidentified Investor(s) Abengoa, Industrial Development Corporation, Public Investment Corporation, Unidentified Investor(s) Aldwych International, Finnfund, IFU, KP&P Africa, Netherlands Development Finance Company (FMO), Vestas Wind Systems Nov-15 Hydropower 1,000 USD Jun-14 Solar Power 908 USD Mar-14 Wind Power 870 USD Angola Odebrecht Nov-15 Power Distribution 797 USD 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 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: Preqin Ltd. /

5 Download the data pack: Preqin Special Report: The Infrastructure Market in Africa Africa-Focused Fundraising 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 Africaheadquartered 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 $200mn in grid-connected development stage renewable energy projects across Sub-Saharan Africa (Fig. 9). Fig. 7: Annual Africa-Focused* Unlisted Infrastructure Fundraising, YTD (As at 7 July 2016) Fig. 8: Africa-Focused* Unlisted Infrastructure Fundraising by Fund Manager Headquarters, YTD (As at 7 July 2016) 8 100% YTD Year of Final Close 5 No. of Funds Closed Aggregate Capital Raised ($bn) Proportion of Total 90% 80% 70% 60% 50% 40% 0% 42% 42% 25% 33% No. of Funds Closed 8% 50% Aggregate Capital Raised South Africa- Based Managers Rest of Africa- Based Managers Non-Africa- Based Managers Fig. 9: Five Notable Africa-Focused* Unlisted Infrastructure Funds Closed, YTD (As at 7 July 2016) Fund Firm Headquarters Final Close Date Fund Size (mn) InfraMed Infrastructure InfraMed Management France May EUR Meridiam Infrastructure Africa Fund Meridiam France Oct EUR Vantage GreenX Debt Fund Vantage Risk Capital South Africa Nov-13 2,160 ZAR African Renewable Energy Fund Berkeley Energy UK Sep USD Convergence Partners Communications Infrastructure Fund Convergence Partners South Africa Jun USD 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 *Funds with a primary geographic focus on or substantial investment in Africa (excl. geographically diversified funds with exposure to African infrastructure) Preqin Ltd. / 5

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7 ...gain a new perspective. 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: alternative assets. intelligent data.

8 Preqin Special Report: The Infrastructure Market in Africa Download the data pack: Global Funds Investing in Africa The 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 $12.5bn (Fig. 14). Fig. 11: Global Unlisted Infrastructure Fundraising as a Proportion of All Fundraising* Targeting Investments in Africa, YTD (As at 21 July 2016) Fig. 12: Annual Global-Focused Unlisted Infrastructure Fundraising*, YTD (As at 21 July 2016) Proportion of Total 100% 90% 80% 70% 60% 50% 40% 0% 97% 88% 89% 83% 77% 96% 96% 98% 84% 75% YTD Year of Final Close YTD Year of Final Close No. of Funds Closed Aggregate Capital Raised ($bn) No. of Funds Closed Aggregate Capital Raised ($bn) Fig. 13: Five Notable Global Unlisted Infrastructure Funds* Closed, 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 *Includes funds that may have exposure to Africa Preqin Ltd. /

9 Download the data pack: Preqin Special Report: The Infrastructure Market in Africa Africa-Based Investors 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 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 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). Fig. 15: Africa-Based Institutional Investors in Infrastructure by Type Fig. 16: Africa-Based Institutional Investors in Infrastructure by Assets under Management Bank/Investment Bank 29% 9% 11% 9% 4% 5% 12% 12% 19% 19% Investment Company Insurance Company Private Sector Pension Fund Public Pension Fund Asset Manager Sovereign Wealth Fund Wealth Manager Other Proportion of Investors 25% 15% 5% 0% 24% Less than $1bn 14% 24% $1-4.9bn $5-9.9bn $ bn $50bn or More Assets under Management Fig. 17: Africa-Based Institutional Investors by Source of Infrastructure Allocation Fig. 18: Africa-Based Institutional Investors in Infrastructure by Preferred Route to Market 80% 23% 3% 7% 3% 53% Separate Infrastructure Allocation General Alternatives Allocation Part of Private Equity Allocation Part of Real Assets Allocation Proportion of Investors 70% 60% 50% 40% 63% 69% Part of Opportunistic Allocation 6% Other 0% Unlisted Funds Direct Investment Listed Funds Route to Market 2016 Preqin Ltd. / 9

10 Preqin Special Report: The Infrastructure Market in Africa Download the data pack: 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 mn 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 Fund Looking 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 Fund Will 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: Source new investors for funds or deals Identify new investment opportunities Conduct competitor and market analysis Search for potential deal partners Develop new business Find out how Preqin s Infrastructure Online can help your business: alternative assets. intelligent data.

11 Download the data pack: Preqin Special Report: The Infrastructure Market in Africa Global Investors Targeting Africa The 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%) Fig. 20: Global Infrastructure Investors with a Preference for Africa by Location 4% 4% 26% 4% 5% 6% 6% 7% also make up notable proportions of institutions with a preference for Africafocused 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 38% US United Arab Emirates China UK France Denmark Japan Switzerland Other 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 () holding $50bn or more in total assets (Fig. 22). Fig. 21: Global Infrastructure Investors with a Preference for Africa by Type Fig. 22: Global Infrastructure Investors with a Preference for Africa by Assets under Management 35% 6% 7% 7% 16% 17% 13% 12% Government Agency Private Sector Pension Fund Investment Company Bank/Investment Bank Public Pension Fund Corporate Investor Sovereign Wealth Fund Proportion of Investors 25% 15% 5% 22% 19% 8% 11% 11% Family Office Other 0% Less than $1bn $1-4.9bn $5-9.9bn $ bn $50bn or More Assets under Management 2016 Preqin Ltd. / 11

12 Preqin Special Report: The Infrastructure Market in Africa August 2016 Preqin: Global Data and Intelligence If you want any further information, or would like a demo of our products, please contact us: 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 Search detailed information on over 16,000 infrastructure transactions and bids historically, including buyers and sellers, equity invested, debt provided and the percentage stake acquired. Identify key geographical regions and sectors that are attracting infrastructure investment. Track infrastructure assets Analyze ownership information, and past transaction history for more than 9,200 infrastructure assets across the globe, including asset location, project stage and industry. Find firms investing in infrastructure Search for firms actively targeting infrastructure projects and assets, with detailed profiles on fund managers, institutional investors and trade buyers from around the world, including background, key contacts and past deal activity. Identify service providers Track over 1,100 debt providers, law firms, financial advisors and other service providers working on infrastructure transactions. View service providers working on specific deals. Source new investors for funds and co-investments Find the most relevant investors, with access to detailed profiles for over 2,600 institutional investors actively investing in infrastructure, including insurance companies, pension funds, family offices, foundations, wealth managers, endowment plans, banks and more. Benchmark performance Identify which fund managers have the best track records with performance benchmarks for infrastructure funds and view performance details for over 220 individual named funds. Find out how Preqin s infrastructure products and services can help you: New York: One Grand Central Place 60 E 42nd Street Suite 630, New York NY Tel: Fax: London: 3rd Floor Vintners Place 68 Upper Thames Street London EC4V 3BJ Tel: +44 (0) Fax: +44 (0) Singapore: One Finlayson Green, #11-02 Singapore Tel: Fax: San Francisco: One Embarcadero Center Suite 2850 San Francisco CA Tel: Fax: Hong Kong: Level 9, Central Building 1-3 Pedder Street Central, Hong Kong Tel: Fax: Manila Pascor Drive Sto. Niño Parañaque City Metro Manila 1700 Philippines info@preqin.com Web: Preqin Ltd. /