Ninety One’s SA Infrastructure Credit Fund has reached R2 billion in assets under management in just over a year since its March 2024 launch, reflecting growing institutional investor interest in South African infrastructure debt.
The fund was created to help close South Africa’s critical infrastructure funding gap, investing primarily in senior debt instruments across transport, renewable energy, water, and digital connectivity. More than 80% of capital is deployed into domestic projects in the public and private sectors, targeting challenges from water security to energy reliability.
Since inception, it has backed high-impact developments including the Lesotho Highlands Water Project and Vaal River Transfer Scheme – supporting water security for 33% of the population – the 100MW De Aar Wind Farm, which powers 85 000 households annually, and Teraco, South Africa’s leading data centre provider. Collectively, projects funded to date have supported over 230 000 jobs, transported 33.8 million passengers, and generated more than 1 million MWh of energy per year, enough to supply 380 000 homes.
Nathaniel Micklem, the co-head of Emerging Market Alternative Credit at Ninety One, said the rapid growth reflects both investor demand and the availability of bankable projects.
“It’s clear that investors are responding to the opportunity to earn compelling risk-adjusted returns, while supporting inclusive and sustainable growth in South Africa.”
South Africa’s infrastructure investment levels remain far below where they need to be, Micklem notes, with the World Bank estimating gross fixed capital formation at just 14% of GDP in 2022 – well below the 30% target recommended by 2030.
The open-ended fund blends public and private credit, offering quarterly liquidity – unusual for infrastructure investments. It draws on Ninety One’s 17-year private credit track record, over R58bn already invested in infrastructure across South Africa and Africa, and the expertise of a 40-strong dedicated team.
Micklem adds that the fund’s diversified portfolio and robust origination pipeline make it well placed to play a meaningful role in nation-building and client portfolios, while helping investors diversify through an asset class with low correlation to traditional markets.
Risks may be lower than investors think
Global infrastructure investment – currently valued at about US$1 trillion – is on track to nearly double to over US$1.9 trillion by 2027. Yet most of that capital flows into developed markets, despite the strong fundamentals in emerging economies.
Speaking at Ninety One’s Perspective Infrastructure Forum last year, Martijn Proos, the co-head of Emerging Market Alternative Credit, argued that investor caution towards emerging market infrastructure is often based on outdated perceptions.
“Emerging markets have high urbanisation rates, a growing need to transition, and significant funding shortfalls – all of which make for a great investment opportunity,” said Proos.
According to Proos, investors in emerging market infrastructure can expect a yield premium of 200 to 300 basis points over developed markets. And although risks exist, they are often overstated.
He said historical data shows cumulative default rates for infrastructure projects over 20 years are broadly similar between developed and emerging markets. Defaults tend to peak early – about 4% in developed markets and 6% in emerging markets – before stabilising. Recovery rates average 75% to 80% in both.
“Although defaults in emerging markets are marginally higher, the risk of permanent capital loss is largely mitigated,” said Proos.
For Ninety-one, assessing a project’s commercial viability is only the starting point. Sustainability and socio-economic impact are equally important.
“A good project should also have a high impact,” Proos said.
Chief sustainability officer Nazmeera Moola added: “Risk mitigation is what ensures creditworthiness. Having clarity on a project’s impact on people, the planet, markets and the wider economy strengthens its resilience.”
Blended finance structures – where public institutions, banks, or credit insurers absorb first losses – further reduce risk.
Nadia Nikolova, the lead portfolio manager at Allianz Global Investors Development Finance, said such structures enable more risk-averse investors to gain exposure without taking on local currency risk.
The data and experience suggest the case for emerging market infrastructure is compelling: higher yields, strong recovery rates, and effective risk mitigation tools.
As Proos summed it up: “They are not out of the park as people normally would expect.”
