Meridiam’s Thierry Déau on doubling its African investments

Thierry Déau, chairman and chief executive of Meridiam, founded the independent investment firm in 20025 to develop, finance, and manage long-term and sustainable infrastructure projects. With over $20bn of assets globally today, the firm has more than 120 projects under development, construction or in operation. But there is much more it can do in Africa, Déau tells Hichem Ben Yaïche.

How do you explain the rise of your company?

It’s easier to explain failures than successes! Ours fitted in well with a demand from both local populations and public authorities, who were looking for a new way of partnering and investing. The very basis of Meridiam’s business model is our ability to make long-term commitments. From the outset, the design of our projects is linked above all to public demand, right up to the moment of operation.

What sectors do you cover and what infrastructure do you finance?

We are active in three key areas: sustainable mobility, energy transition and low-carbon solutions to help the public sector and industry decarbonise, and human services, including education, healthcare and social infrastructure.

All of these are essential public services for which we need to forge partnerships with the public, governments and local authorities, particularly in areas such as Africa, which require partnerships with multilaterals or bilateral financial institutions in order to bring the best of our projects to life.

In terms of strategic planning, what projects are you developing?

First and foremost, we focus on the areas with the greatest needs; the issue of essential service is the first criterion for us. We don’t want to build infrastructure to please people, but to have an impact. In the field of “sustainable mobility ”, the Bus Rapid Transit (BRT) in Dakar, for example, is having a major impact on people’s daily lives.

Where do the funds come from?

Our funds are regulated by the AMF, the French financial markets authority. Capital is raised on a regular basis from institutional investors, including pension funds and insurance companies around the world, as well as development banks such as the European Investment Bank.

We are investors in these funds for 25 years. Over this period, we mobilize the resources needed to design and develop the projects, and sign contracts, notably concessions. We then finance and manage the construction and operation of the infrastructure.

How do you approach and work with funders?

They work with us on a project-by-project basis. We work a lot with certain donors because they have a strong presence in Africa. Multilaterals and bilaterals are the financial partners capable of providing long-term debt. This is important when you’re working on projects for 20 to 30 years. If we want to borrow on the local market, financial maturities are often five to seven years. This does not correspond to the duration of the infrastructure. These lenders therefore play a very important role on the African continent, as they enable infrastructure to be financed over the long term.

How do you work on skills issues to recruit the best people?

We need a wide range of skills. We recruit a lot of engineers who understand finance, the environment and relations with the public sector. Generally speaking, we hire a lot of young people, often school leavers, whom we train. In Africa, we make a point of working with local Africans, both in our project companies and in our four offices on the continent.

You are present in only ten countries in Africa currently. How do you explain this, despite the continent’s considerable potential?

Well, we’ve already invested over €5bn there in just a few years! And we intend to double this amount in the near future, which is very important to us.

Above all, our action is in response to requests from governments. Not all countries are ready for this type of partnership. Some, like Morocco or South Africa, don’t need us to help them develop their skills. We also need skills that are local, but also public, where people are used to managing long-term contracts.

This is why we have financed a foundation alongside the French government and the European Investment Bank to develop skills. On the public sector side, we have another program, the Africa infrastructure fellowship program, dedicated to training African civil servants. It is designed in conjunction with governments, private sector players, multilateral development banks and national and international development institutions to accelerate the implementation of infrastructure projects in Africa through training and capacity-building.

The program enables participants to acquire the knowledge they need to develop and implement infrastructure projects while integrating the Sustainable Development Goals. The program will be available in both civil law and common law.

What makes you different from the others?

We are long-term players who place the same high standards on financial return as on social and environmental benefits, everywhere and for every project. What sets us apart is our patience: it takes time to design and finance a project, sometimes seven or eight years before it comes on stream. Not everyone has the necessary patience; secondly, we have the skills and the ability to interact with the public sector, so that we can put ourselves in their shoes and work with them to define the best service or project for users.

How is “risk” assessed at Meridiam, given the considerable geopolitical uncertainties weighing on the global economy?

Our risk is counterparty risk. Geopolitical risk is present everywhere, and is our main long-term risk. If we focus on Africa, there’s a difference between the perception seen from Paris, New York or elsewhere and the reality. Nevertheless, to convince our investors, we need to have solutions to counter certain risks. We systematically work in partnership with bilateral and multilateral to provide protection and insurance against political, economic and social risks and instabilities, and against breach of contract.

How is your Group adapting to the reality of artificial intelligence and digital technology?

The advantage on the African continent is that we can switch to these new technologies straight away, as in the case of clean mobility in Dakar with the electric Rapid Transit Buses. The first of their kind in Africa. User services will be digitalised, with the ability to buy tickets by phone. Being there, in the moment, and building the best infrastructure also means providing access to the best technologies.

What are your current ambitions in Africa as a key player in the private sector?

For me, Africa remains a land of opportunity, with long-term prospects. It’s a continent with very important sectors and rapid demographic growth. The need for these essential services is enormous. We therefore need to provide a more global response to the continent’s development. We need to focus on this aspect of development and investment, and position ourselves over the long term to put the continent’s risk into perspective.

And yet, we can’t ignore the dimension of crises, wars, conflicts and political and institutional instability in certain areas.

How do you factor these risks into your approach?

It’s a risk that deserves special attention, and we take the risk of investing in certain countries. But we try to protect ourselves against these risks by taking out insurance policies with lenders such as the World Bank, and the MIGA (Multilateral Investment Guarantee Agency) insurance policy, which enables us to make these essential investments.

How do you plan to achieve long-term results?

It’s a very strong hiring criterion at Meridiam to adopt these values in terms of impact and public services. From the outset, we have made a point of having teams with a high gender mix, but also with many different nationalities. This gives us a very strong ability to listen and to enter into relationships with many different countries. It also gives us flexibility and adaptability. It’s easy to become local, even though we’re global.

Our ambition in Africa is to double our investments over the next few years, despite all the obstacles to be overcome. It can be done. For the Group, it means continuing to grow without losing our long-term DNA, and providing essential services that change people’s lives.

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