Asset manager Sanlam Investments has launched a Sustainable Infrastructure Fund (SIF) that will invest in local projects for market development and job growth, with an emphasis on environmental sustainability.

Sanlam says stable, inflation-bearing returns will be delivered to investors over the long term, through an easy-to-access fund structure.

The asset manager has initial commitments of R500-million into the fund, but aims to attract R5-billion in additional investment from institutional investors.

The Sanlam group also aims to invest a further R6-billion of its own capital alongside the fund into projects that drive infrastructure development.

“We recognise that infrastructure is going to play a critical role in spurring the growth of our economy. We’re investing not only for our current generation but also for future generations. The Sanlam group is mindful of the role we play in directing capital to support the strategically important sectors of our economy.

“For this reason, we’re supporting our Sanlam Investments Alternatives business in this endeavour,” says Sanlam group CEO Paul Hanratty.

The SIF will provide mostly debt financing for projects, targeting consumer price inflation plus 4.5% a year, and will be accessible for a minimum R25-million investment.

The fund’s targeted sectors are renewable energy, conventional energy, housing, transportation, communication, health, water and waste.

“As our economy continues to struggle, capital investment into South African infrastructure projects is vital for recovery and a return to solid growth. Efficient infrastructure brings faster and easier access to markets, healthcare and educational services – the social and economic benefits are undeniable.

“We believe this new fund has the potential to have a real positive impact on the economy,” states SIF lead portfolio manager Ockert Doyer.

He explains that, in the short term, infrastructure investment can create jobs, stimulate economic activity and improve consumer and business confidence.

“Over the longer term, it increases the capacity for economic growth and, owing to high forward linkages to the wider economy, delivers positive outcomes for future generations.”

Sanlam multistrategy and alternative investments head Pawan Singh says the fund can deliver diversification, stable cash flows and capital protection to retirement funds and larger corporate investors, while making a positive impact on the country and people, particularly amid the enduring volatility of equity markets.

The fund will track development outcomes, which are aligned with the United Nations’ Sustainable Development Goals, over time, so that investors can see the deliberate financial and social impact.