1. Background


1.1               This submission is made in response to the inquiry launched by the IDC on behalf of the UK Parliament on the UK’s strategy towards development finance institutions.


1.2               The submission is made by Herc van Wyk, the CEO of Pembani Remgro Infrastructure Managers (Pty) Ltd (“PRIM”), a fund management company based in South Africa.


1.3               PRIM’s strategy is to raise funds to invest equity in private sector infrastructure opportunities on the African continent, with a specific focus on investments in energy transition, digital infrastructure and transportation & logistics.


1.4               During 2015 PRIM established a fund, Pembani Remgro Infrastructure Fund I (“PRIF I”) and, following successful deployment of this fund, Pembani Remgro Infrastructure Fund II (“PRIF II”) was established in 2022.


1.5               BII is an anchor investor in both PRIF I and PRIF II.


  1. How does BII’s strategic outlook compare with that of other comparable overseas institutions?


2.1               BII’s strategic outlook is similar in many areas to comparable overseas institutions, although BII in our experience is notable in that it:


(i)                  often takes a leadership role in discussions and negotiations;

(ii)                 adopts a much closer long term partnership approach than many others;

(iii)               has the ability to utilise a deep pool of expertise within the organisation, spread across several jurisdictions;

(iv)               performs a very detailed on-site due diligence before seeking any final investment approvals;

(v)                 provides a high level of comfort to other potential investors when it invests in a fund;

(vi)               ensures that current best market practice is followed in the fund documentation and related processes;

(vii)             demonstrates a thorough understanding of the unique complexities and context faced by investors on the African continent; and

(viii)            has shown to be pragmatic in finding constructive and long-term solutions for any potential challenges, often by using its prior experience.   


  1. How do external events influence the investment decisions of BII (e.g., in response to the crises in Afghanistan and Ukraine, the depreciation of Sterling etc.)?


3.1               As an existing investor, BII would engage closely with PRIM to ascertain the effect of any of these events on an investment portfolio. In the event that any of these events may potentially lead to capital constraints at BII, we have experienced a pro-active and open dialogue from BII.





  1. What due diligence does BII undertake prior to making investment decisions and how does this compare with best practice?


4.1               BII is seen as a market leader in its approach to due diligence. The resulting quality and comfort that an investment by BII provides, assists in attracting additional investors. BII has also demonstrated a willingness to discuss certain due diligence findings with other potential investors in order to optimise the due diligence process.


4.2               BII conducts its due diligence in several phases and encompasses a diverse process, from reviewing several due diligence questionnaires and supporting documentation, including, but not limited to legal agreements, investment and valuation processes, historical and projected financial performance, environmental, social, corporate governance and business integrity, background checks on all individuals, transaction pipeline review and on-site visits to the fund manager. It also engages portfolio companies and other potential investors to ensure alignment with BII’s principles.


4.3               BII has a multi-stage approval process that informs each step of the due diligence process and leads to commercial and legal negotiations.


4.4               BII also makes public disclosure of its potential investment.


  1. How effectively does BII manage funds following its initial investment?


5.1               We find BII to be one of the most pro-active investors in our funds and its involvement in managing its fund investments takes place at different levels, which include:


(i)                  entrenching dates for various feedback reports in the fund documentation;

(ii)                 ongoing day-to-day engagement with the fund manager;

(iii)               formal semi-annual limited partner advisory committee meetings, which need to cover certain specific agenda items;

(iv)               formal annual in-person annual general meetings;

(v)                 site visits to investments made by the fund; and

(vi)               ongoing availability for training of fund management staff to ensure managers remain abreast of best practice.


  1. How does BII evaluate the impact of its investments?


6.1               When PRIF I was established in 2015, BII plated a leading role in introducing ESG best market practice in the fund documentation. As fund manager we were obliged to provide an annual ESG report on how these principles were being implemented. BII also provided ongoing assistance and education on all aspects of ESG.


6.2               Although not formally established as an ‘Impact’ fund manager, PRIM’s investment activities by their nature deliver notable and measurable outcomes that will have an impact on the wellbeing of the societies in which its investments are situated. BII has been instrumental in assisting PRIM to start measuring the impact of its investments and to provide an annual impact report.


6.3               With PRIF II being established in 2022, BII’s ESG and impact measurement has been accepted as market standard, with BII now driving PRIM to achieve specific gender, climate and black ownership and leadership targets for the fund, which will be measured on an on-going basis.


6.4               PRIM provides reports to BII using the UN Sustainable Development Goals and measures a portfolio company’s impact against this internationally recognised standard. BII continues to engage with PRIM on further development and refinement of its impact reporting and how it can support its portfolio companies from an impact perspective.