AIIM leads investment in R1.9bn government office project

African Infrastructure Investment Managers (AIIM), through its IDEAS Managed Fund, has acquired a 32.5% stake in a public-private partnership (PPP) to develop new office accommodation for the Department of Agriculture, Rural Development and Land Reform.

"We are extremely proud to participate in this project, says Vuyo Ntoi, Joint Managing Director of AIIM. "PPPs introduce the possibility of private funding for public infrastructure, which is highly relevant in the South African context, where public budgets are constrained, and the need for investment is significant."

The IDEAS Managed Fund is one of South Africa's largest domestic infrastructure equity portfolios that invests in economic, social and renewable energy infrastructure in the Southern African Development Community (SADC) region.

With consortium partners, WBHO, Bidvest, Vulindlela Holdings and the Tshala Bese Uyavuna Broad-Based Ownership Scheme, this R1.88bn project will be operated on a 25-year concession.

The terms of the concession will see the Tshala Bese Uyavuna Proprietary Limited Consortium design, build, finance, operate and maintain the new serviced working environment. This facility will accommodate all of the department's Tshwane-based employees in a single work environment.

Ntoi explains that the PPP agreement removes the financial burden from the fiscus because the capital expenditure will be funded upfront by the consortium during the construction period.

"This partnership involves locking in a long-term collaboration between both parties to share the costs, rewards and risks of the project," he says.

"In addition, the risk transfer aspect embedded in the contract will enforce specific performance from the consortium to ensure the project is delivered on time and within budget. This further limits the risk for the government."

Other crucial aspects of the concession include a commitment to meeting employment equity and skills development targets. This will see black people, women, and youth involved in management positions within the project company's executive and governing bodies.

Both the BBBEE and PPP codes of good practice were applied by the department to ensure equitable participation in the project.