African ICT requires massive investment
Convergence Partners, a specialist African investment management firm, last week launched the Convergence Partners Communications Infrastructure Fund (CPCIF), dedicated to the information and communications technology (ICT) sector in Africa. With a first closing of US$145 million, it is one of the largest African infrastructure funds, notwithstanding its single sector focus.
“Based on World Bank data, we estimate that there is an ICT infrastructure deficit of US$20 billion a year in Africa.
The evolution of the ICT landscape, with its increasing focus on shared, open access models, provides significant investment opportunity for a specialised infrastructure fund,” said Andile Ngcaba, Chairman of Convergence Partners. “As a business, we benefit from on-the-ground presence, as well as deep knowledge of the ICT sector and the operating and regulatory environments in Africa.”
CPCIF, which has a targeted final close of US$250 million, aims to invest in communications infrastructure and related services and technologies across sub-Saharan Africa.
It expects to generate significant returns for investors, while also enabling ICT-driven socio-economic development. CPCIF reached its first close with capital commitments from the following investors: Convergence Partners (as sponsors), the International Finance Corporation (IFC), the European Investment Bank (EIB), the Dutch Development Bank (FMO), the Development Bank of Southern Africa (DBSA) and the CDC Group (CDC).
According to a recent McKinsey report, increased use of the Internet in Africa could result in a contribution of US$300 billion a year to the continent’s gross domestic product by 2025.
However, the infrastructure to deliver these services remains significantly underdeveloped. The upgrading, management and ownership of existing and new infrastructure by specialist owners with private capital provides the investment opportunity for the ICT infrastructure fund to achieve its financial and developmental goals.
Convergence Partners has a proven track record in sourcing, developing, managing and exiting successful investments in its chosen sector in Africa. The team managing the fund is led by Andile Ngcaba, Chairman, and Brandon Doyle, CEO, supported by executives with skills and experience across all facets of ICT investing.Ngcaba commented “As an impact investor, Convergence Partners is dedicated to catalysing investment capital to accelerate communications access and ICT infrastructure development on the continent. We focus on initiatives that increase the availability of communications, broadband services and new technology offerings to the people of Africa. The launch of this fund will enable us to achieve these objectives on a greater scale.”