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(Bloomberg) — British International Investment intends to tap £7 billion ($9.45 billion) held by insurers, pension and sovereign wealth funds as co-investment into various projects globally over the next five years.
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In total, the UK’s development finance institution will invest £15 billion over that period, according to Chief Executive Officer Leslie Maasdorp. BII will provide £8 billion of the amount, with the remainder coming from pooled domestic savings, he said in an interview.
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About 60% of the planned outlay will be in Africa primarily targeting infrastructure, financial services, climate change and sustainability-linked businesses. The continent’s insurers, pensions and sovereign funds are estimated to hold $4 trillion of assets.
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“The single biggest metric that will define the next five years for BII and development finance more generally is the mobilization of domestic capital,” Maasdorp said in the Kenyan capital, Nairobi. “One of the key areas of funding that we are now working on is to mobilize and crowd-in more domestic pools of capital.”
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Currently, the bulk of available capital in Africa is allocated to government securities, with assets under management in capital markets seen nearly tripling to $7 trillion by 2040, according to financial markets development agency FSD Africa.
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On an average annual basis, BII’s rate of return on investments is about 5%.
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BII is investing in energy, which it expects will be the most important contributor to transformation on the continent. About 80% of the people who live without electricity globally reside in Africa, Maasdorp said.
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The agency has a 70% equity stake in power projects developer Globeleq and wholly owns transmission company Gridworks Development Partners LLP.
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“Without power, the African continent will not develop and really reach its full potential,” Maasdorp said.
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