27 November 2009 Public Investment Corp Realising Africa's potential By Stephen Cranston

The Government Employees Pension Fund has not undertaken any conventional offshore investments - it has no US treasury bills or European equities, for example. But it has investments outside SA - US$250bn in the Pan African Infrastructure Development Fund (PAIDF) with other Africa-based investors such Old Mutual, Absa Capital, the Eskom Pension & Provident Fund and Ghana's Social Security & National Insurance Trust. The fund was motivated by former SA president Thabo Mbeki, who said it was up to Africans to save Africa. The continent has historically relied on development finance from the US and Western Europe, yet there is $120bn of potential investment capital housed within national Pension Funds on the continent. In 2007 Harith Fund Managers was set up and appointed to manage the PAIDF, a private-equity fund with a 15-year lifespan. Harith CEO Tshepo Mahloele says the fund invests primarily in greenfield projects and many only start generating cash flow after four years. He sees a 15% annual return in dollar terms as a disappointing performance for the fund, though this is a very attractive return compared with, say, long-dated bonds. "And I believe a 25% internal rate of return is achievable." The PAIDF's largest holding is a 21% interest in Essar Telecoms Kenya Holdings, one of four mobile telecom operators in Kenya, which operates under the brand Yu. The next largest investment is New GX/Community Investment Ventures Holdings, which lays fibre-optic cables in SA and other parts of sub-Saharan Africa.