The Fund will be managed by a wholly owned subsidiary of African Infrastructure Investment Managers (Pty) Limited (“AIIM” or “Fund Manager”); a joint venture between Macquarie Africa (Pty) Limited (“Macquarie”), part of the Macquarie Group, and Old Mutual Investment Group South Africa (“OMIGSA”). Macquarie Africa is a division of the Macquarie Group, which is headquartered in Sydney, Australia and listed on the Australian Securities Exchange. Macquarie Group is a diversified international provider of banking, financial, advisory and investment services, with a market capitalization of over $5 billion as of September 30, 2009. Macquarie Capital’s ability to source and acquire unique assets has allowed it to develop a number of specialist funds globally (including in the infrastructure and real estate sectors). With more than 13,800 staff located in 27 countries, the Macquarie Group has established 33 listed and unlisted infrastructure investment vehicles in Australia, Asia, the Middle East, Europe and North America. The group has $48 billion of infrastructure and essential services equity under management as of December 31, 2008. The Old Mutual Group is a UK-based savings and investment group, listed in London, Johannesburg, Namibia, Malawi and Zimbabwe. It has operations in five African countries, including in South Africa where it was originally established. Its principal operations are banking (through Nedbank, which its controls), life assurance, general insurance, and asset management. For the six months to end June 2009, the group announced a consolidated profit of GBP 27 million, on total assets of GBP145 billion and shareholders’ funds of GBP9.7 billion.

AIIM expect to raise $600 million to $1 billion for the Fund. IFC is considering providing up to $100 million in equity.

100.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	100.0

* These investment figures are indicative

AIIF2 will be established as two parallel investment vehicles, one offshore registered entity and another vehicle registered in South Africa. Both vehicles will be making investments in Africa with a bias towards Sub Saharan Africa.

There are huge infrastructure need in Africa and especially Sub-Saharan Africa. The lack of infrastructure is hampering the region’s ability to grow, compete, and reduce poverty. Infrastructure is the underlying foundation of basic services, facilities and institutions upon which the growth and development of a modern community depends. Assets such as reliable power supply and road networks are essential to the sustainability and growth of an economy, and to the quality of life of the people living within and across the communities connected and served by those assets. The project will address a key constraint for developers of infrastructure projects in African countries – the availability of equity capital. Given the large funding requirements and the long gestation periods of infrastructure projects, we anticipate that the Fund will facilitate the provision of stable and informed equity for the development of infrastructure projects in the region. The Fund is also expected to impose market discipline on investee projects, leading to better alignment with demand for infrastructure services, more efficient management, and lower operating and maintenance costs.

Through its investment in AIIF2, IFC will strengthen its partnership with the Macquarie Group and work with the Old Mutual Goup to create an infrastructure fund which will consider investment opportunities in the Sub-Sahara Africa. IFC will: Provide early support to this comparatively new class of funds through providing a stamp of approval; Play a catalytic role in supporting a fund manager achieve first commercial closing and increase its chances of raising additional funds; Improve the Fund’s governance and structure; Enhance project quality by introducing IFC’s environmental and social sustainability standards in the Fund’s investment processes; and Provide implicit political risk cover due to the World Bank Group’s presence on the investor base.

This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure.

Given the nature of infrastructure projects in which the Fund may invest environmental and social impacts are likely to be significant. Building upon Macquarie’s existing set of policies and procedures used to identify, mitigate and manage potential environmental and social risks of its investments, IFC will require the Fund to establish and maintain a Social and Environmental Management System ("SEMS") that ensures compliance with:

The IFC FI Exclusion List,
The Fund’s constrained coal-fired thermal power investment policy,
The applicable Social and Environmental Laws and regulations, and
The IFC Performance Standards (“PS”).
To ensure compliance of Fund investments with the PS, AIIF2 will be required to:

Upgrade the SEMS prior to commitment to the satisfaction of IFC and to reflect Fund investment policy constraints involving coal-fired power generation;
Identify responsible, qualified persons to manage and implement the SEMS;
Commit to implement the SEMS, to ensure that investments supported by IFC financing are in compliance with the PS;
Commit to take action to remedy gaps, if any, in SEMS implementation on an ongoing basis; and
Submit a periodic report to IFC describing the environmental and social performance of AIIF2’s investments in relation to the SEMS policies and objectives, including coal-fired thermal power generation.