Corporate investment into sub Saharan Africa is at an all-time high. Between 2000 and 2014, Africa’s real GDP grew at a rate of more than twice the rate of growth that the continent achieved in the 1980s. At 5 per cent per annum this growth rate is currently one of the highest in the world and has resulted in the African continent’s collective GDP reaching USD2.5 trillion in 2014.
The most important reason for Africa’s higher growth rates has been improvement in political and economic governance across the continent. Better governance has meant that there have been improvements in overall macroeconomic policy management leading to improvements in fiscal stability and overall monetary policy. As a result:
- the collective African inflation rate fell from 22 per cent in the 1990s to 8.9 per cent after 2012;
- there have also been improvements at the microeconomic level where regulatory and legal systems have been liberalised and strengthened;
- several state-owned enterprises have been privatised; and
- trade barriers have been lowered.
All these microeconomic initiatives have improved competition and improvements in productivity and corporate growth more broadly. This high growth has created the opportunity for increased investment by the private sector in the continent’s infrastructure.
Against this backdrop, two well-known businessmen from the African continent, Johann Rupert (chairman of Remgro Limited) and Phuthuma Nhleko (chairman of Pembani Group), working with an experienced team of African merchant bankers, identified a particular niche and commercial opportunity for investment in private infrastructure across Africa. During 2012, they established a joint initiative, the Pembani Remgro Infrastructure Fund, managed by a team with an established track record of infrastructure finance and transaction execution on the African continent. The Fund has the appropriate profile and attributes to act as a conduit for investors wishing to participate in the vast opportunities on the African continent.
The fund manager is Pembani Remgro Infrastructure Managers Proprietary Limited (“Pembani Remgro”), which is owned jointly by Remgro Limited (“Remgro”), Phuthuma Nhleko and the investment team. Pembani Remgro is based in Johannesburg. The core investment team is in place and has built the Fund’s transaction pipeline and completed the initial investments. Collectively, the investment team has over 100 years of global infrastructure investment experience and broader investment and transaction execution experience in Africa. The Fund and the fund manager were established during 2012 and it received its initial capital from Remgro and Phuthuma Nhleko as cornerstone investors. Since then the key focus of the investment team has been to build a strong transaction pipeline and already made four investments.
In May 2014, the Fund embarked on a global fundraising and achieved its first close in the second quarter of 2015 and final close in the third quarter of 2016.