In what represents the largest realization for private equity investment in Africa’s toll road infrastructure to date, African Infrastructure Investment Managers (AIIM) has successfully sold the South Africa Infrastructure Fund’s (SAIF) investments in three privately-concessioned toll roads. The buyers are a consortium of the assets’ largely existing investors which include the Public Investment Corporation, Liberty Group Limited, Old Mutual and Africa Finance Corporation. Additional terms of the deal were not disclosed.
According to an AIIM spokesperson, SAIF has reached its extended maturity date and certain fund investors favored an orderly realization of the funds investments. AIIM retains stakes in the toll roads through its other managed Funds.
SAIF was established in 1996 with a R722 billion in capital and a mandate to invest in SADC markets. AIIM was appointed manager for the fund in 2000, since when it refocused the funds investment priorities and gradually enhancing its exposure to the toll roads sector between 2000 and 2003. In addition, AIIM also established sub-funds to enable it to increase its capital commitments to R1.855bn for further investments in each asset between 2010 and 2013.
The toll roads cover in excess of 1,364 kilometres, extending from South Africa’s Gauteng province along key transport corridors to Maputo in Mozambique, the Botswana border and KwaZulu Natal. During SAIF’s tenure of the assets, more than R13 billion was spent rehabilitating and expanding the roads to maintain service standards and increase road safety for users. Additional benefits accruing from SAIF’s ownership and investment period included support of a comprehensive range of socio-economic and education programs along the concession corridors.
Noting that the sale is a positive sign to the ongoing maturation of Africa infrastructure sector and it’s help in allaying investor concern around the ability to dispose of infrastructure assets, Jurie Swart, AIIM’s CEO said “The interest from international investors is a testament to Africa’s improving status as an investment destination in the current global environment of low yields,” adding that AIIM’s active investment approach has allowed the fund manager to “…develop a portfolio of mature toll road concessions with operations and governance on a par with those seen in developed markets.”
The sale, which saw strong interest from both domestic and international investors, was managed using a competitive bid process to ensure transparency and protection of all parties.
Macquarie Capital acted as the financial advisor on the transaction, while Webber Wentzel provided SAIF with legal advisory services.