Business
Convergence Partners launches $145 million African Infrastructure Fund
Andile Ngcaba – Founder and Chairman Convergence Partners
Convergence Partners a South African-based investment group, founded and headed by serial entrepreneur Andile Ngcaba, has launched a US$145 million fund that will invest solely in information and communications technology (ICT) infrastructure across sub-Saharan Africa, it said on Wednesday.
According to Ngcaba, the fund would be invested in areas such as the installation of fiber-optic cable, high-speed wireless networks, satellite and spectrum-related infrastructure. Investment in infrastructure will enable access to high-speed communications services, and boost innovation and the economy.
According to a report by McKinsey, 16 percent of Africa’s 1 billion people are online today, but that share is rising rapidly as mobile networks are built and the cost of Internet-capable devices continues to fall. The report further says 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 (GDP) by 2025.
Ngcaba revealed that Convergence Partners Communications Infrastructure Fund would invest in both existing companies focusing purely on infrastructure, and in greenfield infrastructure opportunities. The fund is targeting a final close of US$250 million. It will look to deploy capital in cross-border opportunities as well as within individual countries.
“We are great supporters of open access, we need to invest in more infrastructure to allow for an open-access model,” Ngcaba said.
A wholesale open-access model will stimulate competition and create opportunity for more companies to provide services.
Convergence Partners executive Brandon Doyle said: “Based on World Bank data, we estimate 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 specialized infrastructure fund.”
Convergence Partners, which is already rolling out a fiber network in South Africa, has invested US$30 million in the fund. Other investors include the Development Bank of Southern Africa, the World Bank’s International Finance Corporation, European Investment Bank and CDC, the UK’s development finance institution.
In addition to its Johannesburg office, Convergence Partners will open regional offices in Nairobi, Kenya to cater for the east and central African region and Lagos, Nigeria – to cater for the West African region.
Convergence Partners is also looking into an opportunity to establish a teleport in Africa.
According to Ngcaba, one of the biggest issues in Africa was that a lot of data traffic was being routed into Europe. By having a teleport, data and voice will be routed within Africa via satellite. “Teleport is a great opportunity to ensure traffic remains within the continent,” he added.
Source: BD Live