The number of impact-focused infrastructure funds around the globe has more than tripled over the last decade, to 357. Managers remain concentrated in developed markets, but more than 120 of the funds now target social, economic and climate infrastructure in Africa. That makes the continent’s emerging markets the hotspot for impact investing in infrastructure, according to Phenix Capital.
One reason: Returns on investment on African renewable energy “are about twice as high as renewable energy in developed countries,” said Anders Hauch of Copenhagen-based Frontier Energy, which manages $300 million across two renewable investment funds for Africa.
African capital
Though still a small overall portion of portfolios, an increasing amount of the funds’ capital comes from Africa’s local insurance companies, pension funds and other institutional investors, as USAID Invest’s Natalie Alm and Dipika Chawla highlighted in a guest post on ImpactAlpha this week.
After a recent policy change, South African retirement funds can invest up to 45% of their cash in infrastructure. Johannesburg-based Alexforbes Investments in July launched the AF Infrastructure Impact Fund-of-Funds to give investors exposure to South Africa’s economic and social development, including renewable energy, transportation and public utilities.
The fund will prioritize high-performing Black-owned or managed infrastructure portfolios. Alexforbes’ South Africa Private Markets portfolio made a 1 billion rand ($56 million) allocation.
