Africa Finance CorporatioN Building the New Africa
Published by Henley Media Group Ltd in association with the Commonwealth Secretariat
AFRICA FINANCE CORPORATION
Africa Finance Corporation (AFC) Building the New Africa Overview
The Central Bank of Nigeria(CBN) provided the anchor capital for the start-up of the Corporation. The Bank’s current shareholding of just over 42 percent will decrease as other
Africa Finance Corporation (AFC) is a private sector led
African shareholders join the Corporation. African financial
International organisation established by treaty between
institutions currently make up 48 percent of our shareholders,
independent sovereign states, domiciled in Nigeria with
with African industrials and corporations holding close to 10
activities across Continental Africa. Current membership
percent. Each of these groups contributes significantly to the
includes Nigeria, Ghana, Guinea Bissau, Guinea, Sierra
makeup and operations of the institution. The public sector
Leone, The Gambia and Liberia.
shareholding gives AFC important access to government, which is critical in Africa for sustainable investments in
AFC was established in 2007 to fill a void in project
infrastructure. Having African financial institutions so actively
structuring expertise and available risk capital with US$1bn
involved promotes synergy between African banks, broadens
in fully paid-in equity capital. The Corporation offers a
our reach and strengthens local support and partnership.
unique value proposition as an Africa-focused infrastructure
The African industrials and corporations on our board help
financing institution providing competitive products and
integrate local corporate experience, and strengthen support
services across the complimentary areas of; principal
from leading local sponsors.
investing, financial advisory services, project development and technical advisory.
The Corporation’s business is that of providing principle investment capital in infrastructure projects or companies operating in five
Our shareholders include the Central Bank of Nigeria,
target sectors – Power, Oil & Gas, Transport, Telecommunications,
various African financial institutions and other industrial
Heavy Industry - deploying all our financial instruments – debt,
and corporate shareholders. The AFC Board of Directors is
equity, mezzanine and guarantees, across continental Africa.
chaired by the internationally respected investment banker,
The Corporation also uses its liquidity to support trade finance
Bayo Ogunlesi, who has several decades of experience
transactions in African countries. Since inception, AFC has been
financing infrastructure assets globally. The Corporations
actively involved in originating, structuring and executing a portfolio
management team is lead by its President & Chief Executive
of projects and transactions in the African infrastructure space, with
Officer, Mr Andrew Alli.
over US$733m in gross debt and equity investment approvals.
1
C.S. Tyco Resolute at Tema Port, Ghana - Submarine cable laying vessel on arrival from Siexal, Portugal.
Executing our Mandate
the products and services that drive economic development. Since inception, we have underwritten over $ 732.9 m in debt, equity and equity-related products across our project
AFC’s Role - AFC is a supranational financial institution, is self
portfolio.
regulated but adheres to international best practices including ‘inter alia’ capital and leverage tests. Maintaining a sound
Principle investing and co-investing is another way
financial condition is vital if we are to be effective in meeting
we directly align the corporation’s interests with those of
the needs of our clients. Among the roles we play for our
our clients. While returns fluctuate based on equity market
largely institutional client base are transaction advisor, project
performance and other factors, our investment banking
developer, financier, investor and co-investor. Today, AFC is
business has achieved credible returns from generation of
increasingly being seen as a partner of choice for infrastructure
advisory and arranging fees for our shareholders over the
investment across the continent.
long term.
Project Development - Financing for Growth & Economic
Our financial and technical advisory business serves as
Development. AFC acts by providing capital for our investing
our primary point of contact with our clients and is often the
clients for financing projects to generate growth and deliver
genesis for sourcing other opportunities to serve them.
Project Development
Principal Investing
Advisory
Coordinate project management
Provide financial to projects on a
Financial advisory on project finance
from concept through construction
project finance basis, and to existing
transactions
firms seeking expansion capital Risk capital for project development Engineering and technical expertise
Arranging of external debt and Equity, mezzanine, debt and
equity to support advisory or other
other instruments as needed
transactions
to ensure flexibility and maximum returns
Technical advisory services
Business Model Underpinned by Complementary Offerings
2
Portfolio Highlights The bulk of our project portfolio is in the power, oil and
AFC operates a project portfolio that has seen US$732.9m
gas, transportation and heavy industry sectors across
in gross debt and equity investment approvals since 2008.
six jurisdictions including; Cape Verde, Ethiopia, Ghana,
No one sector contributes more than 25 percent. Among
Kenya, Nigeria, South Africa.. Of its US$1.1 bn in capital,
other projects financed by AFC a number are noteworthy:
Main One Cable Company AFC
In 2010 AFC received the African Banker Magazine award for Deal of the Year for its 2009 Main One investment. AFC was nominated alongside Citadel Capital, EFG-Hermes Investment
AFC is the largest equity investor in the USD240mn African-
Bank, Rand Merchant Bank and Standard Bank.
led Main One Cable System. This is an undersea fibre optic cable that has increased broadband capacity along the west coast of Africa tenfold, providing a major link to the “information super-highway”, enhancing West Africa’s connection to Europe and the rest of the world. Main One continues to deliver excellent operational performance (100% uptime since going live) and strong sales performance despite competition in the marketplace, funding challenges for some bandwidth purchasers, and a lag in investments required by market operators to take-on capacity from the cable.
Main One ‘Splice’ Event on board CS Tyco Resolute Completion of cable laying and connection of all landing stations of the cable system - Tema Port, Ghana. L-R: Andrew Alli, CEO AFC; Funke Opeke, CEO Main One Cable Company.
3
Source: http://manypossibiities.net/african-undersea- cables
African Undersea Cable Capacity
Main One Splice Event on board CS Tyco Resolute Tema Port, Ghana. R-L: Funke Opeke, CEO Main One Cable Company; Representative of SubCom (Tyco Electronics Subsea Communications); Hon. Haruna Iddrisu MP, Minister of Communications, Ghana; Former Head of Ghana Telecommunications Regulatory Commission, Ghana
4
Seven Energy Gas Pipeline Project - Uquo Ikot Abasi, Akwa Ibom, Nigeria
Seven Energy
arrangements are in place with major industrial customers in the region (power & heavy industry).
Nigeria suffers from a significant gas supply-demand
Seven Energy Sustainability - The oil and gas business
imbalance, presenting enormous challenges for domestic
is Nigeria’s largest industry and by far its largest export
power generation. Seven Energy is an indigenous oil and
and earner of foreign currency and fuel oil, making it the
gas exploration and production company, focused on
second largest importer of refined petroleum products in the
the monetization of Nigeria’s significant discovered but
world’. . Nigeria has the seventh largest gas reserves base
undeveloped gas reserves. Seven Energy has several
in the world (180 Trillion cubic feet, but despite substantial
major assets with proven reserves owned in Nigeria, and is
discoveries of both associated and non-associated gas, the
managed by an internationally experienced team. In August
domestic market and infrastructure remain under-developed.
2010, Seven Energy entered into a Joint Operating Agreement
In the absence of sufficient electricity generation capacity, the
with Sinopec for development of the Stubb Creek field, and
country relies heavily on diesel.
in November 2010 entered into a strategic alliance with Petrofac Limited. Petrofac is a leading international provider of facilities solutions to the oil & gas production and processing
“From its origins as an oil and gas development subsidiary,
industry, with a diverse customer portfolio including many of
Seven Energy has set out to become a major gas producer
the world’s leading integrated, independent and national oil
to the Nigerian home market. In 2010 Seven Energy:
& gas companies. Petrofac is quoted on the London Stock
Employed more than 500 workers from host communities
Exchange and is a constituent of the FTSE 100 Index. Petrofac
to work on and support construction of the pipeline, and
will invest US$100 million to acquire a 15.0% interest in Seven
strengthened its senior management team”.
Energy alongside a further $50 million from existing and other investors. New Production is due end 2011. Key off-take
5
Scott Aitken - Chief Executive officer Seven Energy
Seven Energy Gas Pipeline project – Uquo Ikot Abasi, Akwa Ibom,Nigeria
Lowering in of final sections
6
Bakwena Toll Road
The Africa Finance Corporation
Bakwena Toll Road - AFC is an investor in the Bakwena toll road project, South Africa. The Bakenwa toll road route has been designed to form part of an East-West axis connecting South Africa’s industrial and commercial heartland of the Witwatersrand, with its nearest deep water port in Maputo, Mozambique. The industrial corridor was conceived to stimulate agriculture, manufacturing, mining and tourism. The Bakenwa project is a combination of urban tolling in the suburbs of Pretoria and long haul intercity tolling. The Bakwena Highway group signed the concession agreement with the South African National Roads Agency Limited (SANRAL) to design, build, finance, operate and maintain the Platinum Toll Highway in 2000. The highway consists of a 95 km section of the N1 running from Pretoria (Tshwane) northwards to the town of Bela Bela and a 290 km section of the N4 running from Pretoria westwards to the Botswana border. The N4 route consists of a dual carriageway on the northern side of Pretoria from Tshwane to Rustenburg and onwards to the Bostwana border.
Geographic location of the Bakwena Toll Road, South Africa
7
www.afcriafc.org
Doornpoort Toll Plaza Approach - Bakwena Toll Road, South Africa
The N1 also connects the N4 from Witbank at the Proefplaas Interchange with the new N4 Platinum Toll Road to Botswana at the Doornpoort Interchange. Africa Infrastructure Investment Managers (AIIM) co-invested with AFC in an equity investment to part-fund the acquisition of Infrastructure Concession South Africa (Pty) Ltd, a special purpose vehicle established to hold 50% of Bakwena Platinum Corridor Concession (Pty) Ltd, a toll road concession company that operates the Bakwena Highway. The Bakenwa toll road route has been designed to form part of the Maputo development corridor, an EastWest axis connecting South Africa’s industrial and commercial heartland of the Witwatersrand, with its nearest deep water port in Maputo, Mozambique. The industrial corridor was conceived to stimulate agriculture, manufacturing, mining and tourism. The Bakenwa project is a combination of urban tolling in the suburbs of Pretoria and long haul intercity tolling. The investment underscores AFC’s expertise in investing in Public Private Partnerships and Private Finance Initiatives in its focal
Doornpoort Toll Plaza - Bakwena Toll Road, South Africa
sectors across the African continent.
8
Cabeolica - Renewable Energy Project The first commercial scale Public Private Partnership wind farm in Sub-Saharan Africa - The Cabeolica Project was awarded the Best Renewable Project in Africa Award at the Africa Energy Awards 2010 The Cape Verde based Cabeolica wind farm project is the first commercial scale Public Private Partnership (PPP) wind farm in Sub-Saharan Africa. AFC is the majority investor in Cabeolica SA, which was established to develop, build, own and operate
the US$90 million, 26MW landmark renewable energy wind power project in Cape Verde, on the western seeboard of the Continent, north of the Equator. The PPP with the Government of Cape Verde and the national power utility, Electra, entails the construction of 30 wind turbines on four of the seven inhabited islands of the mid-Atlantic archipelago. The project is financed with equity from the Africa Finance Corporation, Finnfund, InfraCo Africa, Electra and the Government of Cape Verde. Debt financing is provided by the European Investment Bank and the African Development Bank. Providing 26MW of electricity into the grid, the project will ensure that over 25% of the nation’s power needs are provided through renewable energy sources (instead of
Windmill installation, Santiago, Cape Verde
9
utilizing expensive and imported fuels) and the project stands to benefit from carbon credit revenues under the Clean Development Mechanism Initiative. In addition, the project will lead to significant direct and indirect employment opportunities and local manpower capacity development. The project is the first commercial scale PPP wind farm in Sub-Saharan Africa and underscores the global imperative for sustainable renewable / green energy solutions. Through this project AFC has strengthened its commitment to pioneering renewable energy investments on the continent by effectively harnessing local renewable energy resources to provide more cost efficient and sustainable power for national economic development in Cape Verde. Renewable energy resources need to be harnessed effectively to provide more cost efficient sustainable power, address the infrastructure investment deficit and make an economic difference in the lives of Africans. AFC has strengthened its commitment to pioneering renewable energy investments on the continent with a lead investor role in this project, and was honoured to be recognised for providing an African private sector investment solution which
Windmill installation, Santiago, Cape Verde
underscores the global imperative for sustainable energy.
10
Ethiopian Airlines Fleet Modernisation
workforce and cost in the region of USD 668 million. AFC co-financed new Boeing 777 aircraft, as part of the Ethiopian Airlines’ investment plan for 2010-2018, by providing debt
Ethiopian Airlines, the national flag carrier of Ethiopia,
finance to Ethiopian Airlines in support of the purchase of
was founded in 1945. Today, it has become one of the
five Boeing 777-260LR passenger jets. The new aircraft
continent’s leading carriers, operating at the forefront
will expand Ethiopian airlines capacity on long haul routes
of technology, and unrivalled in Africa for service and
to and from Africa, from its Addis Ababa hub. AFC’s co-
operational excellence. The airline plays a pivotal role in the
financiers in the project include; Citibank N.A., London,
economic development of Ethiopia with a highly respected
African Development Bank, US Eximbank, and PTA Bank,
indigenous training and maintenance operation, and
Kenya. AFC will continue to partner with institutions such
integrated cargo network. The Airlines commands a major
as Ethiopian Airlines, in its quest to achieve and surpass
share of the pan-African air transport network, serving 58
its worldwide competitors in continued technical and
international destinations. It plays a major role in capacity
service excellence and capacity development, and in so
development within Ethiopia. The modernization of its fleet
doing execute on our mandate to bridge the infrastructure
will create in excess of 400 skilled jobs within the airlines’
investment deficit in Africa.
Investment in Neconde Energy – Landmark Oil and Gas Acquisition Neconde Energy is an indigenous E&P company with strong potential to be a local indigenous champion similar to recently formed companies taking advantage of the emerging local content and International Oil Company divestment opportunities. The company is championed by reputable Nigerian entities supported by international technical and financing institutions, thus positioning the company to take advantage of the dynamic regional oil & gas prospects and attain a strong production asset base. An investment in Neconde falls squarely in AFC’s oil and gas strategy, to support the growth of indigenous firms seeking regionalisation and to
Shell Divestment of its Nigerian onshore ‘acreage’/assets
capture more of the value of Africa’s natural resources on the
OML 42, Nigeria
Continental ridge the infrastructure investment deficit in Africa.
11
Public Sector Financial and Technical Advisory In Nigeria, AFC has advised the Federal Ministry of Finance (FMoF) and the Central Bank of Nigeria (CBN), on appropriately structuring investment interventions in the various infrastructure sectors - particularly power and transport (aviation). The CBN mandate centres on Technical Advisory for the N300.0bn (US$2.0bn) Power and Aviation Intervention Fund (PAIF).
Formal signing of Ghana’s membership-
Thus far, AFC’s recommendations have led to the approval
Ministry of Finance, Accra, Ghana
of N185.2bn (US$1.2bn) of the Fund by the Committee of Governors of the CBN, with 80.0% of this being for aviation
L to R: Dr. Kwabena Duffuor, Minister of Finance & Economic
projects, and 20.0% for power projects.
Planning of Ghana (left) with Mr. Andrew Alli, AFC President & CEO, after the formal signing
In Nigeria, the Corporation closed a number of captive IPP financings, aimed at supporting industrial power supply capacity, pending an appropriate regulatory environment for larger sized projects. As Technical Adviser to the CBN, AFC
for the establishment of the Africa Finance Corporation (the AFC
is playing a quiet role in helping drive policy decisions in the
Treaty) and the Charter of the Africa Finance Corporation (the AFC
appropriate direction to support private power investments.
Charter). In June, 2010 Nigeria formally ratified her membership of
AFC is also leading a group of international partners towards
the corporation by passing the Diplomatic Immunities and Privileges
bringing the 300MW Ghanaian independent power project
(Africa Finance Corporation) order granting full International status
- Cenpower (one of the largest privately-owned IPPs in the
to the corporation. The Corporation’s membership is comprised of
region) to financial close in 2011. This project will serve
African States, corporate entities such as major commercial banks
to illustrate the enormous potential for private-sector led
and financial institutions, other private sector commercial entities
solutions in power generation, both in West Africa and
and a few individuals. AFC’s current member states, in the order
elsewhere on the continent.
in which they joined the organisation are: Nigeria, Guinea-Bissau, Sierra Leone, The Gambia, Liberia, Guinea. Ghana formally joined
Executing our Mandate – Expanding Country Membership
the corporation as its seventh member on 30 November, 2010 when the Ghanaian Parliament ratified Ghana’s membership and approved a resolution for Ghana to subscribe for US$50 million of shares in the Corporation thus expanding the pan-African country membership of AFC. Prospective new members include Zambia,
The Africa Finance Corporation is an international organisation
Zimbabwe, and the countries which comprise the West African
established by treaty between independent sovereign states. AFC
Economic and Monetary Union: Benin, Burkina Faso, Cote d’Ivoire,
was created by two constitutive legal instruments: the Agreement
Guinea Bissau, Mali, Niger, Senegal, Togo.
12
Credits Henley Media Group Ltd.