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AIIM
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progress P O W E R E D
As Africa’s largest and most experienced private equity management firm with a focus on infrastructure, African Infrastructure Investment Managers (AIIM) have a big role to play in the continent’s ever-developing energy sector as it transitions away from coal and towards renewables.
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ith investments across SubSaharan Africa totalling US $2.1 billion, AIIM is a forward thinking firm that has long struck a delicate balance between being a keen follower of trends in the energy market and a leader in infrastructure investment.
The future looks green
Since being established as a joint venture between Old Mutual and Macquaire, and then becoming a wholly owned subsidiary of Old Mutual Alternative Investments in 2015, AIIM has has proven its track record across seven different infrastructure funds, demonstrating a willingness to listen to the needs of Africa’s energy industry and the audacity required to dive in ahead of the curve.
The affordability of renewable energy sources has the potential to make Africa’s power sector a world leader. This is supported by policy initiatives across the region, including South Africa’s Renewable Energy Independent Power Producer Procurement (REIPPP) program, which has so far delivered a quarter of the national renewable energy target of 18,800MW to be supplied by renewable energy by 2030, and Nigeria’s Renewable Energy Master Plan, which aims to increase the contribution of renewable energy to account for 10% of Nigerian total energy consumption by 2025. As a result, renewable energy is expected to make up 40% of sub-Saharan African generation capacity by 2040.
It is continuing to invest in progressive infrastructure with the African Infrastructure Investment Fund 3 (AIIF3), targeting core and core-plus infrastructure investments in the power, transport and midstream energy sectors.
“One of our industry’s biggest challenges is sourcing and securing the best investments that deliver value
Africa’s energy landscape is unlike any other on the planet. Its shortcomings, such as the fact that around 63.5% of the population in sub-Saharan Africa do not have access to electricity, are actually becoming catalysts for innovation, as the continent has been described as “leapfrogging” over coal and towards renewable energy.
AIIM has been actively supported this transition away from coalbased energy projects, investing the vast majority of the AIIF3 in renewable infrastructure, including the acquisition of a stake in Nigerian solar-diesel-battery energy company Starsight Power Utility in February and Amandi
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Energy, a 200MW thermal power station in Ghana, in January. Speaking to ESI Africa, Romain Py, AIIM’s Head of Transactions, said: “As long-term infrastructure investors, we want to make both a positive and sustainable impact, as well as targeting investments with attractive return profiles.”
An appetite for infrastructure
This strong and ever-increasing demand for renewable energy comes hand-in-hand with a rising demand for infrastructure. Historically, insufficient and commercially impractical infrastructure has been a major obstacle in Africa’s economic growth. The few power plants and transmission lines that are present across Sub-Saharan Africa are currently operating at just a fraction of their capacity, having been installed in the mid20th century and inadequately modernised since. The African Development Bank (AfDB) has estimated that, in order to meet energy demand and various policy objectives, the continent will require $170 billion a year in infrastructure investment for the next decade. “One of our industry’s biggest challenges is sourcing and securing the best investments that deliver value. A deep local presence and geographically diversified portfolio are essential in doing so,” says Py.
I n f r a s t r u c t u r e
“The improvements in economic conditions are encouraging and reflects Africa’s status as the world’s fastest urbanising continent Since launching in 2017, the AIIF3 has allowed investments in Burkina Faso, Mali, Tanzania and Nigeria to take shape. Additionally, to facilitate further investment and the continued development of projects, AIIM opened their fifth regional office last year in Abidjan, Cote d’Ivoire.
Empowering policy
Thankfully, the investment environment in Sub-Saharan Africa is developing positively due to proactive policy changes. For example, on April 4 South African energy minister Jeff Radebe was finally able to sign renewable energy deals that would unlock R56 billion in direct investment after two years of delays. These delays are anything but a problem exclusive to South Africa. Frustrating bureaucracy and unclear regulation has been hampering investment across the continent, causing Py to issue a warning-of-sorts at the 2016 Infrastructure Africa Business Forum. “Africa’s lack of infrastructure development comes down to policy failures and the stability of
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the regulatory environment,” he said. “If we as investors feel the policy is unclear or not sustainable, we will not invest.” However, in 2018, he appears to have changed his tune, expressing optimism to ESI Africa: “The improvements in economic conditions are encouraging and reflects Africa’s status as the world’s fastest urbanising continent.” Unlocking large-scale investment in the power sector is something that countries across sub-Saharan Africa must take responsibility for through progressive and transparent policy changes. To this end, AIIM are working with a number of African pension funds, empowering them to invest in their own story, according to Py. The bold policy changes being implemented by African governments to move energy consumption away from coal and towards renewables have the potential to make the region’s energy industry one of a kind. However, without sufficient investment in supporting infrastructure, the ultimate ambition of improving energy access will struggle to become a reality. For nearly two decades, AIIM have been a driving force behind infrastructure development across Africa, and their influence will continue to be felt as the renewable sector gains momentum.
Power to to Change Power Change Azura Power is a developer, financier, acquirer and operator of Independent Power Plants (IPPs) across Africa.
Azura Power is a developer, financier, acquirer and operator Our ambition to build the continent's leading of isIndependent Power Plants (IPPs)power acrossgeneration Africa. platform. Visit www.azurapower.com
Our ambition is to build the continent's leading power generation platform. Visit www.azurapower.com
Ground Floor, Colinton House The Oval, 1 Oakdale Road Newlands, Cape Town South Africa T: +27 21 670 1234 E: info@aiimafrica.com
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