WASHINGTON, D.C., September 22, 1999 —
The International Finance Corporation has invested in the largest equity fund ever established for investment in privately-owned infrastructure projects in Africa, the AIG African Infrastructure Fund (AIF). World Bank Group President James D. Wolfensohn hosted a ceremony marking the occasion of the fund's closing of $400 million and announced that Nelson Mandela, former president of South Africa, had agreed to chair the fund's advisory board.
AIF, a 10-year term private equity fund, was created with IFC's close involvement to mobilize financing from strategic and institutional investors for private sector infrastructure projects, which will total about $2.5 billion across Africa.
IFC Executive Vice President Peter Woicke said that "countries across the continent need to significantly expand infrastructure systems and services as a platform for sustainable economic growth. African governments are adopting policies to encourage private investment and open up crucial infrastructure enterprises through privatization. The success of this fund is an endorsement of those policies and a reflection of investor confidence in Africa," he said, adding that it is part of the supply-side response that African reformers have been seeking.
The fund represents a significant financing source for infrastructure projects in Africa and is expected to stimulate foreign investment, lead to institutional development in the infrastructure sector, and promote the growth of capital markets in the region, especially local debt markets. It will invest in projects that will bring improved services to consumers, such as affordable and more reliable electricity, better roads and bridges, efficient telecommunications and transportation, and enhanced services for water and sewerage treatment.
IFC has committed $75 million in equity—representing 15 percent of the fund size—to AIF. IFC will also take an ownership stake in the fund manager, AIG African Infrastructure Management LLC (AIM), and may co-invest with AIF, an additional amount of up to $25 million for its own account, in sub-projects which are of particular interest.
American International Group, Inc. (AIG), the leading US-based international insurance organization, is the project sponsor and leading co-investor with a commitment of $75 million. As a sponsor of three existing infrastructure funds in emerging markets, AIG already plays a significant role in mobilizing private capital for investments dedicated to infrastructure. Other leading shareholders of AIF are Midroc, the company owned by international investor Sheikh Mohammed Al-Amoudi with $50 million; the African Development Bank with $50 million, Development Bank of Southern Africa with $25 million; and several other international investors and development agencies, including the European Investment Bank and Proparco, which is the private sector arm of Agence Française de Développement of France.
AIF will be advised by Emerging Markets Partnership (EMP), a Washington D.C.-based international fund management company, which will also operate AIF.
The mission of IFC, part of the World Bank Group, is to promote private sector investment in developing countries, which will reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses.
