The Board of Directors of the African Development Bank on Tuesday, December 17, 2013 in Tunis, approved a US $25-million equity investment in the Second Pan-African Infrastructure Development Fund (PAIDF-2), a private equity fund investing in infrastructural development, private sector competiveness and regional integration in Africa.
In 2006, the Bank had invested US $50 million in the first infrastructure fund (PAIDF 1) with Harith as the Regional Fund Manager, with its considerable experience, industrial knowledge and credible pipeline of projects across the continent. PAIDF-2, which is aligned to the Bank’s Ten Year Strategy on the one hand, and the Bank’s Private Sector Development Strategy on the other, follows the near full commitment of PAIDF-1 with nine sub-investments in Africa.
PAIDF-2 is in line with a second generation of fundraising, targeting US $1.2 billion, of which the South African Government’s Employees Pension Fund (GEPF) is already emerging as an anchor investor with a commitment of some US $500 million in regional infrastructure.
In approving the project, the Board of Directors expressed satisfaction that the investment is a good deal for the Bank, given the management expertise of Harith, the regional competitiveness perspective of the investment, the expected creation of some 3,000 jobs, and the huge infrastructure needs of the continent and its linkage to Africa50 Fund initiative.
While presenting the PAIDF-2 equity investment to the Board, Samuel Ekue Mivedor, the AfDB’s Private Sector Portfolio Manager, explained the Bank is building on the experience of the last six years of Harith’s Investment Strategy under PAIDF-2, in order to invest more strategically and pragmatically in power, transport, ICT, water and sanitation, as well as health infrastructure subsectors.
In the Bank’s experience, Mivedor underscored that mobilizing sufficient equity to achieve financial closure for projects in these sectors is a most significant fundraising challenge. “In turn, equity funds enable debt to be deployed by commercial development financiers such as the AfDB notably through the provision of senior debt. Beyond the provision of capital, fund managers also add value in advising the sponsors throughout the development, construction and operation phases of the projects,” Mivedor concluded