Sustainable Infrastructure Fund
Portfolio managers Pawan Singh and Ockert Doyer discuss what’s next for this seminal fund
Two years after bringing our Sustainable Infrastructure Fund to the South African market, we are seeking additional capital for this vibrant fund. Our goal is to meaningfully and sustainably impact South Africans by investing in infrastructural development through a fund targeting returns of inflation+5% a year. To date, we have financed a number of unique projects, including a biomass plant that will generate baseload energy for the country and a prepaid fibre-to-the-home initiative that will provide internet access to underserved township communities. We have our eye on several more opportunities.
In this conversation, Pawan Singh and Ockert Doyer update us on the fund’s mandate and progress.
Why should investors consider the infrastructure sector?
Ockert: SA’s infrastructure sector is a dynamic and evolving space that presents numerous investment opportunities, with private sector projects offering significant returns – financial, societal and environmental. Private companies are fulfilling the much-needed funding requirement, most notably in water, transportation and digital infrastructure, in addition to the well-publicised clean energy sector. These are all areas where there is significant activity planned or under way.
What is your fund’s unique niche in the country?
Pawan: Our fund is set apart from competitor offerings by its broader focus across infrastructure. While energy has historically dominated the infrastructure space, we believe it is imperative to diversify by exploring opportunities in digital infrastructure, water and transportation. These sectors face unique challenges and offer significant potential. Our fund is also focused on financing small- to medium-sized projects that are focused on commercial and industrial offtakers, as opposed to large, utility-scale projects.
What deals have you completed recently?
Pawan: We’ve concluded two unique, high potential deals in recent months:
1. Ilitha Telecommunications, a partnership aimed at addressing South Africa’s digital divide and boosting job creation. The initiative connects underserved communities with affordable, high-quality fibre, creating jobs and aligning with UN Sustainable Development Goals. In Mdantsane township, 5 000 homes have been connected, generating 98 new jobs, and this support is expected to create over 800 job opportunities as an additional 70 000 homes are connected. Our partnership and contribution will help create a more equitable and connected SA in the densely-populated and largely underserved township economy.
2. Alien Fuel Group, which provides baseload renewable energy from biomass to Sappi, one of the largest cellulose manufacturing plants in the southern hemisphere. Our fund will support Alien Fuel Group’s sustainable initiatives, including a joint venture with Sappi in Umkomaas, Durban, to establish an R80+ million biomass (waste) to energy plant that will generate steam from wood pellets, made from sawmill wood shavings, as a clean alternative to fossil fuels. This innovative joint venture will also help to reduce landfill waste and mitigate CO2 emissions, contributing to the UN Sustainable Development Goals. The project is well aligned with sustainability goals and local job creation, having created almost 30 jobs in the local community.
How do you select deals?
Ockert: We review fund opportunities through a rigorous lens. Prospective deals must fulfil two objectives. The first is commercial: they must have the potential to deliver robust, contracted returns of inflation+5% a year. The second is impact: they must have the potential to make a tangible, positive and measurable impact to people, the planet and reducing income inequality in SA.
Central to all our investments is job creation potential. We are committed to generating meaningful employment opportunities in the communities where our projects are located to improve the lives of South Africans.
The projects must provide tangible physical infrastructure and should be backed by stable long-term offtake agreements that ensure a reliable revenue stream.
Why should investors consider investing?
Pawan: We are actively seeking capital commitments of R300-R500 million for our next round of deals because we believe they will help to make a real, sustainable difference in our country. Given the potential for strong returns and ability to contribute to our society, this is an investment opportunity that will deliver on many fronts.
We are dedicated to driving significant impact in local communities, and robust financial returns to our valued institutional clients. Together, we can help SA to unlock its full infrastructure potential and build a more prosperous future for all.
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