STANLIB raises $370m for South African infrastructure fund

STANLIB has announced that it has successfully raised R5.5 billion (about $370.2 million) from a wide range of prominent South African investors for the STANLIB Infrastructure Fund II, launched in June this year. The fund will have a fourth and final close in February 2021 where it is aiming to raise a further R2.4 billion (about $161.6 million).

“We see this as a highly positive sign, at a time when President Cyril Ramaphosa has called on the private sector to invest in infrastructure projects to reinvigorate the economy,” says Greg Babaya, head of STANLIB’s infrastructure investments.

“It proves that there is significant appetite for impact investing and specifically for upgrading South Africa’s energy, transport and telecommunications sectors.”

The fund will invest mainly in South African post-construction infrastructure projects but also has the capacity to invest in greenfield projects and aims to generate a real return that is correlated with CPI for investors.

Fund II not only offers investors diversified, risk-appropriate, stable, long-term returns, but is a powerful means of making a tangible and sustainable difference to South African communities. The fund has a broad infrastructure focus and initial investments by the fund are expected to include operating renewable energy plants, mature toll roads, grain storage facilities and investments in fibre and data infrastructure. In addition, the fund is investigating investment opportunities in infrastructure sectors such as storage, telecommunications, social infrastructure, water and pipelines.

This fund follows in the steps of the STANLIB Infrastructure Private Equity Fund I (Fund I), which is fully invested and closed for new investments.

Apart from attractive returns for investors, Fund I’s investments have generated over 700 direct jobs and more than 700 million tons of carbon emissions reductions per year.

The 80MW Kouga Wind Farm is an example of a successful investment that has provided wide ranging societal benefits to its surrounding communities and economic development in South Africa. The surrounding communities own 26% of the project and to date have received significant upliftment such as the building of new schools, skills development, health care and bursaries.

Babaya, who, together with Andy Louw, a key investment professional in the team, was instrumental in launching STANLIB’s private equity capability in 2012, says, “All but two of our Fund I investors are investors in Fund II, which is testament that our clients see the investment benefits of our funds’ strategy, as well as the contribution they can make to the South Africa story and its much needed economic turnaround.”

“As a team, we are deeply enthusiastic about infrastructure and grateful that we are in a position to positively impact the economy and communities we operate in, as we did with the Kouga Wind Farm.”

“The call for private partnership and investments into infrastructure has been widely heard. At STANLIB, we are proud to be in a position to raise and deploy capital in areas that are most needed in South Africa. We will continue to grow and develop our private markets capability as we truly believe that these strategies will diversify the sources of return for our clients and deliver stable, inflation-beating, long-term competitive returns just as we did with Fund I. Further, this investment vehicle will go a long way in balancing competitive returns for investors while assisting South African economic recovery. We are pleased to play a part in applying our investment skills whilst being part of the SA solution,” says Derrick Msibi, CEO of STANLIB.

STANLIB manages over R60 billion (about $4 billion) in pan-African private debt and equity, which makes it a key player in the private equity industry and enables it to offer its investors a range of alternative assets and specialist skills.

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