Subscribe

Convergence Partners raises R2.5bn

Staff Writer
By Staff Writer, ITWeb
Johannesburg, 03 Aug 2015
R2.5 billion to be used for ICT infrastructure in Africa thanks to a Convergence Partners fund.
R2.5 billion to be used for ICT infrastructure in Africa thanks to a Convergence Partners fund.

Investment management firm Convergence Partners plans to spend R2.5 billion ($200 million) on ICT infrastructure across Africa, with a large chunk planned for Southern Africa.

The company recently announced the successful final close of its Convergence Partners Communication Infrastructure Fund (CPCIF), which makes it the largest fund dedicated solely to ICT infrastructure in Africa.

Brandon Doyle, CEO of Convergence Partners, says the fund plans to deploy capital to portfolio investments across the African ICT infrastructure spectrum, improving access to technology as well as communication and broadband services.

"$20 million has been deployed in Southern Africa to date and Convergence Partners is working on/exploring opportunities in other regions."

The $20 million (R250 million) has been spent in South Africa, Malawi and Mozambique so far. Doyle says the CPCIF plans to deploy capital in both regional and in-country opportunities across Africa but no single country or region will dominate in terms of capital allocation.

The CPCIF reached the $200 million amount with capital commitments from South Africa's Public Investment Corporation, acting on behalf of the Government Employees Pension Fund, and an Africa-focused fund of funds. Other investors include the International Finance Corporation, European Investment Bank, the Dutch Development Bank and the Development Bank of Southern Africa.

Convergence Partners chairman Andile Ngcaba says the current fund size is well suited to the scale of infrastructure investment opportunities across the continent. These include fibre, data centres, wireless, financial technology, and ICT platforms that enable e-learning and broadcast and media.

Continental shift

Going forward, Doyle sees tremendous opportunity on the continent for ICT growth and investment.

"We see a number of trends globally and on the African continent that will drive change and offer insights into the next big thing in ICT."

The CPCIF sees many investable trends developing on the continent, with broadband coverage seen as key.

"The widespread availability of broadband being able to change the delivery and consumption of services such as education and healthcare. This will create a number of opportunities as delivery and business models will radically change," says Doyle.

However, challenges remain for broadband in South Africa, and Doyle says despite Africa's inventory of terrestrial fibre-optic networks more than doubling in the last five years, broadband still remains massively under-developed.

"The constraints relating to the availability and cost of international connectivity have been addressed with multiple cables connecting SA since 2009. However, the bottleneck remains at the terrestrial level where long distance, metro and access networks remain a challenge as well as an opportunity.

"The availability and efficient access to spectrum continues to create challenges for the ICT sector in the delivery of wireless broadband. The new technology changes taking place are creating opportunities for the delivery of high-speed broadband services in a more efficient manner, but the cost of deployment in some of the existing and new spectrum bands will place pressure on operators' ability to fund these networks, especially as they start reaching into peri-urban and rural areas.

"These infrastructure requirements will accelerate the moves towards shared infrastructure and open access models to meet the requirements of operators and end-users and present investment opportunities for sector-focused players."

Convergence Partners' investments in South Africa include Comsol, a wireless network deployment and solutions company, and national long-haul network FibreCo.

"Since its completion, FibreCo has already contributed to a significant increase in available capacity on key national long haul routes, and to a substantial decrease in the price of capacity, thereby contributing to the stimulation of demand-side growth," says Doyle.

Doyle adds Comsol owns significant licensed spectrum and plans more expansion both in major cities and smaller populated centres.

Share