Ninety One deepens infrastructure commitment
● Asset manager Ninety One is looking to deepen its investments in public infrastructure in South Africa as financial challenges at a local government level hindered new developments.
MD of emerging market fixed income Alastair Herbertson told Business Times that while the group isn’t widely known for investing in public infrastructure, the company has been investing in other infrastructure assets for more than 20 years.
“So within our investment-grade funds would be investment-grade infrastructure, and that’s sort of 20%-30% of our [portfolio]. Those are R60bn funds; and in our credit funds, which are around about R20bn, we have had 40%-50% invested in infrastructure counterparties.”
Herbertson said Ninety One already had a $1bn (about R19-billion) Emerging African Infrastructure Fund that was focused solely on hard assets elsewhere on the continent.
“We have been developing an infrastructure credit fund to support the South African government in revitalising infrastructure, and that was publicly announced last week at our Infrastructure Forum,” he said.
“This is an opportunity for us to reassure our commitment to the government to revitalise infrastructure and an opportunity to field questions regarding the Infrastructure Fund.”
Herbertson was speaking to Business Times on the sidelines of the Sustainable Infrastructure Development Symposium South Africa (Sidssa) in Cape Town. His comments come as the ANC announced in its election manifesto that it favoured amending regulation 28 of the Pension Fund Act to legislate for prescribed assets, which could force asset managers to divert a portion of their funds to public infrastructure projects.
He said the company was comfortable with buying government bonds, providing capital directly to the government, or leading funding for projects.
“We are equally satisfied with investing in SOEs — obviously understanding clearly the credit risk of certain SOEs — but providing capital to SOEs for them to apply and allocate to infrastructure.
“And we’re willing to go all the way to the other extreme where we invest in 100% private sector providers of infrastructure. We are seeing this as a reasonably interesting market that’s developing.
“In addition to the work we’re doing with the government in infrastructure, we also launched the fund because we see more opportunities to create interesting investment products for our clients by leveraging our experience in those sorts of bespoke private sector vehicles, and those might be IPPs; they might be water treatment plans; they might be private logistics firms.”
Herbertson said municipal governance is seen as a major impediment to infrastructure in South Africa and Ninety One wanted to unlock the country’s economic and social development potential.
“The arrears that are accumulating to SOEs ... it’s making it impossible for the country to develop the large infrastructure they require if we can’t resolve the municipal financing challenge,” he added.
The Sidssa event announced various agreements for infrastructure and 12 priority projects valued at more than R180bn.
They include the development of a Liquefied Natural Gas import terminal, the Durban Container Terminal Pier 1, Gqeberha’s Berth A100 Liquid Bulk, Eskom’s Mossel Bay Gas Project, Eskom’s Tubatse Pumped Hydro Project and Amathole’s water supply augmentation, as well as school and health-care facility developments.
Herbertson said the ANC’s intention to pursue prescribed assets to drive investment into infrastructure wasn’t a major concern for Ninety One as it has been “a component of the narrative and the debate for much longer than just the recent announcement”.