Africa investors allot money for new energy, infrastructure fund

African investor groups have agreed to inject US$625 million into the new Pan-African Infrastructure Development Fund (PAIDF) to develop Africa’s energy, water, transport, information technology, and sanitation sectors.

Agence France-Presse reported regional banking giants ABSA and Standard Bank, and South African Government Employees Pension Fund were among the first institutions to put money into the fund at a July 20 signing ceremony in Johannesburg.

The African Development Bank (AfDB) approved an agreement in April with other major African lenders to form the private equity fund to invest in major African infrastructure projects. (HNN 4/26/07) AfDB agreed to contribute US$50 million to the fund and another US$1 million to the management of the fund.

PAIDF, which is to be formally launched in August at an African Union summit in Ghana, initially was to generate US$450 million to invest directly in infrastructure projects in all regions of Africa, as well as investments in securities of companies that own, control, operate, or manage infrastructure.

PAIDF is to focus on �very large scale� investments in which it can make equity investments of US$25 million to US$120 million, AfDB said. From the investment perspective, PAIDF’s investments of US$1 billion over eight years are expected to spur additional investments for physical infrastructure of US$9 billion to US$14 billion.

Other investors, primarily South Africa-based, are to include the Development Bank of Southern Africa; Public Investment Corp., Africa’s biggest pension fund; Sanlam, a financial services company; Eskom Pension and Provident Fund; and Metropolitan pension fund.

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