Romain is responsible for originating and executing investments into infrastructure projects and companies for AIIM’s infrastructure funds. The 35-member AIIM team manages about USD1.9 billion across six infrastructure funds designed to invest long-term institutional unlisted equity in African infrastructure projects. Romain has an in-depth knowledge of infrastructure sub-sectors and holds an MSc in Corporate Finance and an MSc in International Economics. He is a non-executive Director on the Board of AIIM Hydroneo, a 50/50 joint venture between AIIM and Hydroneo Afrique, a wholly-owned subsidiary of MECAMIDI. Romain was also one of the founding members of the JPMorgan Infrastructure Investments Group where he led a number of key transactions in the UK, Australia and Spain.
How big is the opportunity for public-private partnerships in Africa?
- SSA has nearly 600 million people without access to electricity. Electricity consumption per head is almost five times less compared to BRICS.
- Transport infrastructure, notably roads and ports, represents the second largest opportunity.
- Governments and businesses acknowledge that infrastructure is a critical driver of economic development. Governments, especially in West Africa, are working to close the gap.
- As of last year, 10 out of 15 leading African countries have PPP-specific legal frameworks, and political and financial discipline has also improved.
What key challenges face PPPs and how do you overcome them?
- Currency risk (partially mitigated for the FCFA by its peg to the Euro).
- Environments change and assets change with them. This means that solid long-term relationships with principal parties (state, banks, and regulatory authorities) are vital.
- Focusing on the long term sustainability of projects where there is a significant supply/demand gap supports alignment between developers and the governments and ultimately the success of the project.
- The partners and private capital providers must operate with high ethical standards and promote responsible investing. Local communities must be involved in the journey and must understand any changes to their environment as well as the benefits the project will bring to their community.
What about bottlenecks?
- Some projects can take up to eight to ten years to achieve financial close due, in part, to the requirements of numerous permits, licences, exemptions and approvals from a range of government institutions. Persistence is key.
- There is a perception that governments have overcommitted themselves to too many projects, which could cause a backlog in regulatory requirements and guarantees.
What is the role of a private institution such as AIIM?
- Private-sector investors such as AIIM bring experience in assessing the risks and the appropriate allocation of these risks to the various counterparties best able to bear it – developers, contractors, lenders, governments and investors.
- Investment opportunities are sourced by partnering with industry leaders or through privatisations /concession processes.
- We are then able to provide a means of funding, which is both affordable to the project company but also services the mandate of the investor base.
Give some examples of successful public-private partnerships
- AIIM has helped to bridge the energy gap by investing in a number of key projects in the African power sector: Azura Edo IPP is a 450MW gas-fired power plant in Nigeria; and the 340 MW Cenpower Kpone IPP to develop Ghana’s largest IPP, accounting for over 10% of the country’s installed capacity
- Kipeto Wind Power Project in Kenya is expected to reach financial close by year end.
- AIIM remains the leading equity investor in the South African renewable energy sector through the IDEAS Fund, having closed 18 projects in the REIPPP programme.
Are African governments learning from each other and from the successes?
- An active stance against corruption, especially in Nigeria and Tanzania, has made countries more attractive to investors and facilitates economic growth.
- The power sector best illustrates some of these positive trends:
- Regulatory reforms have improved.
- There has been a gradual migration from traditional energy resources to renewable energy. South Africa has been leading the way, followed by Uganda and Kenya.
- Decentralized power generation is an important part of the answer.
- Renewed focus on regional integration, which would substantially reduce costs, increase system reliability and security of supply. Enlarging markets for power beyond national borders would stimulate investment and diversify the power generation mix.
Is enough being done to get a strong pipeline of projects rolling out?
- There have been positive developments specifically in the power sector with initiatives such as IFC’s Scaling Solar, the US’s Power Africa and United Nations Sustainable Energy initiative.
- Well-established and successful IPP precedents (such as Azito and Ciprel in Côte d’Ivoire) provide a supportive framework for private-sector participation.
What about exits? How is the ability to get out of investments changing and what is the role of private equity and domestic investment institutions?
- AIIM recently concluded the successful sale of investments in three privately-concessioned toll roads in Southern Africa, the largest private-equity realisation for toll road infrastructure in Africa to date. The interest from international investors is testament to Africa’s improving status as an investment destination in the current global environment of low yields.
- The sale is a good example of how private-equity investors create value in the companies they own and operate.