PEMBANI REMGRO INFRASTRUCTURE FUND II

Promoter – Financial Intermediary

PEMBANI REMGRO INFRASTRUCTURE MANAGERS (PTY) LTD

Location

• Regional - Africa

Description

Generalist infrastructure fund targeting equity investments in infrastructure assets in Africa.

Additionality and Impact

EIB's investment supports the investment strategy of an established fund manager to create and further build infrastructure assets in transportation, digitalisation, climate action and energy transition sectors in sub-Saharan Africa that contributes to green and inclusive economic growth as well as equitable access to digital services. It also supports the introduction of high standards of environmental, social and governance ("ESG") best practices in the portfolio companies.

The Fund is focused on sectors with significant growth potential in underserved markets. The operation will address the market failure in risk-taking that is hindering the development of productive infrastructure investments in power, transport, digital services that are considered critical to the functioning of the regional economy. It also addresses the gap between supply and demand that are closely linked to lack of capacity and availability of funding for such assets; in particular after the COVID-19 pandemic which has had a severe effect on Africa's economy.

An EIB investment is seen as an essential component for the Fund to achieve (i) the target fund size, and (ii) crowd-in new investors.

The Fund Manager has demonstrated willingness to introduce structural changes to be in compliance with EIB Group policies and best market practice. EIB's participation will ensure the adoption of best practices in areas of ESG and fund governance. EIB will also use its expertise to align the Fund's key terms with industry best practice.

The proposal will deliver on several EIB objectives outside the EU. It will contribute to the European Commission's Global Gateway strategy, the Digital4Development policy, the European Green Deal, the Circular Economy Action Plan and priority for Sustainable growth and jobs. 

Objectives

The Fund targets both new and existing assets, and intends to apply for the latter a buy & build strategy that consists of acquiring stakes in mature operational assets and then developing and optimizing them further. The Fund targets essential African infrastructure assets in the mobility and logistics, power and energy transition (specifically renewable energy), as well as digital sectors across sub-Saharan countries.

Sector(s)

• Energy - Electricity, gas, steam and air conditioning supply
• Transport - Transportation and storage
• Services - Transportation and storage
• Water, sewerage - Water supply; sewerage, waste management and remediation activities
• Telecom - Information and communication

Proposed EIB finance (Approximate amount)

USD 80 million (EUR 75 million)

Total cost (Approximate amount)

USD 300 million (EUR 282 million)

Environmental aspects

The Fund will be required to have an environmental and social policy and the appropriate management systems in place so as to comply with the social requirements of the Bank. The assessment of the environmental, climate and social impacts and risks will be part of the standard due diligence process that the fund will have to carry out for each portfolio company and any underlying investment and, thereby ensuring that the portfolio and these investments are in compliance with national law and in line with the principles and standards of relevant EU environmental legislation as well as the EIB's Environmental and Social Standards.

Procurement

The EIB will require the fund manager to take all requisite measures to ensure that contracts for implementation of the projects financed by the fund will be tendered in line with the Bank's Guide to Procurement.

Status

Signed - 17/02/2023