Tunga Management Company, a newly launched infrastructure, mining and private equity fund formed by Namibian affiliates of South African asset manager Old Mutual Group, will sell a 26 percent stake in itself to a black empowerment enterprise, according to fund director Steve Galloway.
Black empowerment enterprises, or BEEs, are investment groups formed by previously disadvantaged socioeconomic groups. In Namibia, this includes black Namibians, though, unlike South Africa, Namibia does not have BEE-legislation on its books requiring their participation in business enterprises.
Galloway, who seeks to receive proposals from potential BEE shareholders and award the stake early next year, said that by having a BEE shareholder Tunga “will become a more powerful company” through better access to financial, government and business opportunities in the country.
Tunga is jointly owned by Old Mutual Group and its subsidiary, NedBank, each of which owns a 37 percent stake. They formed the fund last month by pooling their private equity and debt funds.
In 2009, the fund is targeting investments worth a total of N$4 billion (€285 million; $360 million) across infrastructure (N$2.5 billion), mining (N$1 billion), and private equity (N$500 million). These targets, Galloway said, were “kickoff amounts” which might change.
“There’s no reason why we couldn’t double that. There’s projects worth triple of that value in Namibia,” he said.
Tunga will seek investors for the projects as they become ready for financing, he added, as a closed fund approach was not appropriate for investing in Namibia because of the long lead time for project development and attractive returns available from deployed capital.
“We don’t want to be punished with cash,” Galloway said.
Tunga is already assessing three projects, two of which are in infrastructure and one in mining. On the infrastructure side, he said that the biggest opportunities in Namibia are to be found in water and energy projects. In mining, the miner-turned-banker said that the biggest opportunities are in new and expansion projects for uranium, gold and copper mines.
The fund is actively seeking co-investment and debt funding partners for its projects, Galloway said, including African development banks, European development banks, bilateral investment banks and world bank institutions.