African Infrastructure Investment Managers (AIIM) has announced the successful sale of investments in three privately-concessioned toll roads in Southern Africa. Acting as the manager of the South Africa Infrastructure Fund (SAIF), AIIM successfully concluded the transaction on 4 July 2016. This sale represents the largest private equity realisation for toll road infrastructure in Africa to date.
SAIF was established in 1996, and in mid-2000 management of the Fund was awarded to AIIM. Under AIIM’s management, the Fund evolved into a significant player in Southern African toll roads with material stakes in N3 Toll Concession, Trans African Concessions and the South African Toll Road Company, a holding company through which SAIF invested in the Bakwena Platinum Corridor Concession. SAIF’s success was also due to strong support from its institutional investors, who endorsed their confidence in the asset class and AIIM by extending the fund term to 2016, making SAIF the first 20-year infrastructure fund in South Africa.
Each of the toll roads has in excess of 10 years' operating history and together these roads cover a total of 1,364 kilometres on South Africa's key transport corridors extending from Gauteng province to Maputo in Mozambique, the Botswana border and KwaZulu Natal respectively.
During the period of SAIF’s involvement, capital expenditure in excess of ZAR13bn was deployed for rehabilitation and expansion to maintain service standards and increase road safety for road users. The toll road concessions also support a comprehensive range of socio-economic and education programmes along the concession corridors.
Jurie Swart, AIIM CEO, said: “This sale transaction demonstrates the increasing development of the African infrastructure sector and addressing the concern investors may have around the ability to dispose of infrastructure assets. The interest from international investors is testament to Africa’s improving status as an investment destination in the current global environment of low yields. Through our investment approach of active involvement in the management of our portfolio companies, AIIM has been able to develop a portfolio of mature toll road concessions with operations and governance on a par with those seen in developed markets. This has been a foundation of AIIM’s value realisation strategy across our portfolios.”
Andrew Canter, Chairman of the SAIF Governing Board since 2000, said: “The success of this transaction is a prime example of how private equity investors create value in the companies they own and operate. The SAIF investors were early pioneers in establishing the private infrastructure equity sector in South Africa, and the proof of that model is path-breaking for the wider investment community. The realisation process of the toll roads was managed through competitive bids to ensure transparency and protection of all parties and saw strong interest from both local and international investors.”
The final sale was to a consortium of largely existing investors which included Public Investment Corporation, Liberty Group Limited, Old Mutual and Africa Finance Corporation.
Macquarie Capital was the financial adviser on the transaction, with various internationally experienced advisors appointed in respect of legal, tax and accounting, technical, environmental, and insurance matters.
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