Limpopo Bridge takes the lead

Sean Friend, Fund Manager of the IDEAS Managed Fund

The New Limpopo Bridge becomes SA’s first Build, Operate & Transfer concession to be returned to the public sector.

The Zimbabwean Government has taken over ownership and operations of Southern Africa’s first Public Private Partnership (PPP) and Build, Operate & Transfer (BOT) concession, the New Limpopo Bridge, following the expiry of the BOT agreement last week. This is according to Old Mutual Investment Group’s Sean Friend, Fund Manager of the IDEAS Managed Fund, one of the project’s shareholders, who says that this is the first BOT concession in Africa to have run its course with the asset returning to the public sector.

The New Limpopo Bridge was the first true infrastructure asset that the IDEAS Managed Fund bought in 1998 as a BOT concession. In addition to the IDEAS Managed Fund, managed by Old Mutual Investment Group, the project’s shareholders comprise an Israeli consortium as developers as well as Nedbank and Sanlam.

“It was a 20-year concession to build the new two-lane bridge across the Limpopo River at the Beitbridge border between South Africa and Zimbabwe, replacing the old 80-year old single lane bridge,” says Friend. “The objective was to toll it over this 20-year period and then return it to the Zimbabwean government at the end of the concession. In return, and in addition to receiving the bridge back at no cost, the government received both a healthy fee and taxes. Consequently, we believe this is an important example of a successful Public Private Partnership.”

In addition to being the first Southern African PPP project to reach the transfer stage of a BOT, the New Limpopo Bridge is also the first major infrastructure project in Zimbabwe undertaken by the private sector under BOT.

“Fundamental to our investment strategy is the formation of strong long-term partnerships with government departments, financial institutions and prominent operators which allow us to invest in a variety of infrastructure projects,” says Friend. “Through PPPs, a government can facilitate world-class infrastructure without impeding their social infrastructure spend. As such, there are significant opportunities for institutions to partner with governments to meet the Southern Africa Development Community (SADC) region’s diverse infrastructure needs.”

Beitbridge Border Post is extremely important to the economies of the SADC region and is the busiest regional transit link in Eastern and Southern Africa, forming the main axis of the North-South corridor linking South Africa by road and rail to Zimbabwe, Botswana, Zambia, DRC, Malawi, Tanzania, and Northern Mozambique. Over 10 million tons of cargo passes through this corridor annually.

Friend says that it is through partnerships such as the New Limpopo Bridge, that Government can deliver quality infrastructure required to facilitate economic growth. “This provides an effective way for the state to implement large-scale construction and infrastructure projects without taking on the operational risks involved, and whilst mitigating the budgetary impact” he says.

He believes that investment in the development of infrastructure, housing, community property, schools and agriculture is an illustration of Old Mutual Investment Group’s support for the people and economy of South Africa, while simultaneously delivering to investors.The IDEAS Managed Fund was established in 1999 and is now nearly R7bn in size. It has to date consistently delivered investment returns in excess of its benchmark of CPI + 7%.

“Through the IDEAS Managed Fund, we have created and continue to create strong relationships with Government and leading developers on behalf of our investors. It is through these relationships and investment in construction and management of renewable energy, economic and social infrastructure that we can create a sustainable future for South Africa,” says Friend.

Jenna Wilson

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Issue 68