Conway Williams, Prescient’s Head of Alternative Investments
Investors turn to alternatives for diversification and resilience
South Africa’s energy transition is reshaping how investors think about opportunity, risk and impact. In this evolving landscape, Prescient Investment Management, Revego Fund Managers and AlexForbes Investments represent three perspectives on how private capital is driving change, from structured debt and equity participation to institutional investment advisory. Together, they highlight the growing role of alternative investments in bridging South Africa’s multi-trillion-rand infrastructure gap and accelerating the shift toward sustainable energy.
Prescient Investment Management defines alternative investments as asset classes outside the traditional categories of listed equities and bonds. The data-driven asset manager’s primary focus is on private debt, clean-energy debt and infrastructure debt. “We believe the role of these alternatives has become absolutely critical in today’s investment landscape,” says Conway Williams, Prescient’s Head of Alternative Investments.
“The long-standing 60/40 portfolio model, which relied on the negative correlation between stocks and bonds, has fundamentally broken down,” he adds. “Research shows that South African stocks and bonds have been positively correlated nearly 90% of the time since 2000, nullifying the diversification benefits investors once relied on.”
In this new regime of higher volatility and uncertainty, Williams says alternatives provide a vital source of uncorrelated returns. They are less exposed to broad market sentiment and derive value from specific, idiosyncratic opportunities, while delivering tangible economic and developmental impact.
As one of the country’s leading institutional advisors, AlexForbes brings an important lens to this conversation. Through its retirement-fund consulting, investment management and survey research, the firm helps trustees and asset owners assess how infrastructure and renewable-energy allocations fit into diversified portfolios. Its 2024 Manager Watch Survey found that while allocations to alternative assets remain relatively small, appetite is rising as funds look for inflation-linked returns and measurable impact.
Energy and infrastructure
The opportunities in energy and infrastructure are immense, driven by both global trends such as the energy transition and carbon reduction, and urgent local needs such as connectivity, logistics, water and BEE funding. With a multi-trillion-rand infrastructure gap and declining public-sector investment, private capital is stepping in to fund essential projects.
Prescient’s Clean Energy and Infrastructure Debt Fund has deployed more than R6 billion into 31 projects, with more than 95% invested under the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). Launched by the South African government in 2011, the REIPPPP has become a global model for public–private collaboration, attracting more than R300 billion in private investment and helping diversify the national energy mix while reducing reliance on coal.
“In transport and logistics, we are exploring opportunities that enhance connectivity and support regional integration,” says Williams. “In water and sanitation, aging infrastructure and poor maintenance have created a R300 billion investment backlog, and we see long-term potential for projects that deliver both financial returns and social impact.”
Prescient’s investment in Teraco, Africa’s largest data-centre operator, reflects its focus on high-growth digital infrastructure. “We’re also supporting affordable housing and student accommodation through partnerships with niche financiers like Capitan,” Williams adds. In the BEE-funding space, Prescient provides equity-finance solutions that enable BEE partners to fund shareholding in renewable and infrastructure projects. Partnerships with black-owned and black-led firms such as H1 Capital, Reatile and Mahlako.
Managing risk
Prescient’s risk-management philosophy is systematic and evidence-based. “We view risk not as something to avoid, but as something to understand, price, and manage,” says Williams. “ESG is a risk-management lens that reveals long-term issues like climate exposure, supply-chain fragility or poor governance. These are factors traditional models can miss but which have real financial consequences.”
In private markets, this philosophy plays out directly. “Unlike public markets, where we are price and term takers, in private debt and infrastructure we can be price and term makers,” he explains. “We structure deals, negotiate covenants, and demand transparency to manage downside risk. Our credit philosophy is simple: partner with the right people, include the right protections, and cash is king.”
Investor attitudes are also shifting. The breakdown of the 60/40 model has made clear that traditional diversification no longer works. Alternatives now offer not just uncorrelated returns but visible real-world impact. Prescient’s fund, for example, has delivered consistent, inflation-beating returns with low volatility and zero defaults. Aligning financial performance with social outcomes, says Williams, is “a powerful motivator”.
Energy outlook
Williams sees significant opportunities in private-sector transmission, embedded generation, and energy storage as renewable penetration increases. The expansion of South Africa’s transmission grid, long constrained by capacity bottlenecks, is critical. The creation of the National Transmission Company of South Africa (NTCSA) is expected to unlock a wave of new wind, solar, and battery-storage projects.
“There’s also a persistent funding gap for inclusive ownership and broad-based black economic empowerment in South Africa’s clean-energy transition,” Williams notes. Prescient’s Clean Energy and Infrastructure Debt Fund plays a key role here, lending to renewable-energy projects and partnering with developers with proven track records. Portfolio Manager Luzuko Nomjana leads the team, whose structuring expertise and hands-on approach have been central to the fund’s success.
Key challenges remain: investor education, project complexity, policy risk and the illiquidity of long-term investments where capital can be tied up for a decade or more.
Revego’s Chief Investment Officer Ziyaad Sarang adds: “Funds like Revego have built a significant pipeline of renewable-energy investments, yet it remains challenging to channel pension-fund and asset-manager flows into these real assets.
“Despite the expanded allowances under Regulation 28, we have not seen a meaningful increase in pension-fund allocations to real assets or direct infrastructure investments,” says Sarang. “Industry estimates suggest allocations remain well below the new 45% maximum, with most funds still hovering around 2% of investable pension assets.”
The broad definition of ‘infrastructure’ in the latest Regulation 28 amendments has enabled asset managers and trustees to meet regulatory requirements without necessarily directing capital to high-impact, growth-enhancing real assets. This means compliance is often achieved through indirect or listed instruments rather than genuine investment in new projects that drive jobs and economic growth.
Sarang says the market’s inertia is compounded by broadly unfounded concerns over illiquidity, valuation uncertainty and a limited track record for direct infrastructure investments in South Africa.
“While the regulatory framework now supports higher long-term exposure to infrastructure, actual private-capital participation in new projects is still limited,” says Sarang. “Most investment continues to be driven by state-owned enterprises and direct government spending rather than private or pension-fund capital.”
Market confidence
The outlook for private credit and infrastructure remains strong. “We see a robust pipeline and believe we can provide flexible, customised financing that generates attractive, risk-adjusted returns,” says Williams.
Institutional sentiment supports this view. According to AlexForbes’ 2024 Manager Watch Survey, retirement-fund allocations to alternatives are slowly increasing as funds search for yield and diversification. The same report notes a 49% rise in local managers signing the UN Principles for Responsible Investment since 2021. It signals that sustainability is now firmly embedded in mainstream investment thinking.
The human factor
Success in alternative investing requires a rare mix of skills and mindset. “Credit investing demands sceptics, not optimists,” says Williams. “You need to anticipate what can go wrong, stay patient, and maintain conviction despite short-term noise.”
He adds that partnership is equally vital: “We work closely with borrowers, co-investors, and clients; trust and collaboration are what make complex transactions sustainable.”
Williams remains optimistic about South Africa’s alternative-investment landscape. “The country’s investment needs are immense, but so is its resilience. With a young population, abundant resources and a shared drive toward a more inclusive, sustainable economy, South Africa offers fertile ground for long-term investors.”
https://www.prescient.co.za/funds