news - FMO partners with AFC to launch early stage project development facility

FMO and Africa Finance Corporation (AFC) today reached an important milestone by launching a project development facility (the Facility). -  The Facility will make early stage investments in projects under development, pre-financial close, in the infrastructure sector across sub-Saharan Africa.  

Improved governance and macroeconomic conditions have not increased Africa’s share of global private infrastructure investment, despite the substantial and growing demand for infrastructure. Few  bankable infrastructure projects have closed in Africa in recent years, principally due to a lack of early stage development risk capital and the expertise to take such projects to financial close.  AFC is an African-led multilateral financial institution, established in 2007 in Lagos, Nigeria, whose mission is to improve African economies by proactively developing and financing infrastructure, industrial and financial assets.  In respect of early stage projects, AFC was established to help address two major gaps in the development and financing of infrastructure projects in Africa:- the lack of availability of early stage risk capital; and the lack of adequate project development and project structuring capacity to drive projects from vision to bankability and delivery.  AFC thus offers a unique value proposition by providing early stage risk capital and project development  advisory services, in order to increase the pipeline of bankable and well structured infrastructure projects in Africa, in addition to its more usual debt, equity and advisory offerings.

Currently in its sixth year of operation, AFC is playing a major role in bridging the Continent’s critical infrastructure investment gap by undertaking the leading role in a number of projects under development.  In Ghana, AFC is working with local and international partners to develop a 340MW combined cycle thermal independent power project.  The project is at an advanced stage of development and financial close is expected by mid-2013, with commercial operations expected to commence in 2016.  In Cape Verde, AFC is the largest equity investor in a USD90 million, 26MW wind farm  - Cabeolica - the first commercial wind farm public private partnership (PPP) in Africa.  The project, now fully operational, comprised the development, construction, and operation, of the facility.  It now provides approximately 25% of the Island State's power in an economic, environmentally safe and sustainable manner.

The USD15 million Facility will fund early-stage equity investments in projects under development by AFC,  and third party developers, including those referred to the Facility by FMO. The Facility will be managed by AFC and will typically fund technical advisory services and third party expenses. These include:- feasibility  assessments and market studies, environmental reviews, financial modeling services, technical design, and legal services.  The geographical focus of the Facility is sub-Saharan Africa, excluding South Africa and its sector focus is:- power, transportation, oil and gas infrastructure, agribusiness and social infrastructure.

At the launch ceremony in the Hague, Jurgen Rigterink, Chief Investment Officer, FMO, remarked ”the need for financing early stage risk in emerging markets can only be effectively addressed and fulfilled when institutions form strategic partnerships.   FMO is delighted to partner with AFC, which is uniquely placed to manage the facility given its local presence in the region, its extensive track record and proven expertise in project development.  FMO believes that this Facility will assist in bringing key infrastructure  projects to market, thereby creating development impact and reinforcing AFC's and FMO’s role  as  leading  private sector investors in Africa."

Commenting on AFC’s long term project development strategy, Andrew Alli, President & CEO, AFC said “AFC offers a unique value proposition by providing early stage risk capital and advisory services to fast track infrastructure projects under development.  Financial institutions need to form strategic partnerships in order to manage the risks involved in long term project development financing.   Discussions initiated in 2008 with FMO, one of the leading DFIs active in Africa, which is fully committed to the continent's economic development, have culminated in this shared Facility, with a pipeline of projects ready for execution immediately.  We are glad to be working with an institution that has similar objectives and risk appetites to AFC. This collaboration demonstrates the ability to forge strategic partnerships to drive economic transformation in  Africa”.

About AFC - www.africafc.org

AFC is an African-led international financial institution, established in 2007 whose mission is to improve African economies by proactively developing and financing infrastructure, industrial and financial assets.  AFC is involved as an investor, developer and financier of various infrastructure projects, and is gaining recognition as the benchmark institution for financing the development of infrastructure projects in Africa.   AFC is the lead investor in the award winning Cabeolica project, a USD90 million, 26MW landmark renewable energy wind power project in Cape Verde. AFC is the Technical Adviser to the Central Bank of Nigeria (CBN) on the CBN’s USD2.0 billion Power and Aviation Intervention Fund (PAIF).  AFC is a partner with Vigeo Holdings Limited and Tata Power Delhi Distribution Limited for the acquisition of power distribution assets in the current Nigerian Government power sector privatisation round. AFC is also the lead investor in Cenpower Generation Company Limited (Cenpower), which is implementing the USD720 million Kpone IPP project – a 340 megawatt combined cycle gas turbine power plant in Tema, Ghana.  AFC is the lead investor in the Main One fibre optic cable project, enhancing West Africa’s connection to Europe and the rest of the world through faster and more technologically advanced broadband capacity. AFC provided a USD50 million convertible debt investment in Athi River Mining (Kenya) Limited (ARM), the second largest cement operator in Kenya to support expansion initiatives across Eastern and Southern Africa including; development and construction of a lime plant in Tanzania and expansion of ARM’s cement capacity in Kenya. The transaction marked AFC’s first bilateral investment in Kenya.  AFC provided financing for Ethiopian airlines fleet expansion in the acquisition of Africa’s first Boeing 777 airline.  AFC also invested in the Bakwena toll road project in South Africa and the EURO 270 million Konan Bedie Toll bridge in Côte d’Ivoire, the landmark transport PPP project in Francophone Africa, underscoring  its interest in investing in PPPs/PFIs in its focal sectors across the African continent.

About FMO

FMO (the Netherlands Development Finance Company) is the Dutch development bank. FMO supports sustainable private sector growth in developing and emerging markets by investing in ambitious entrepreneurs. FMO believes a strong private sector leads to economic and social development, empowering people to employ their skills and improve their quality of life. FMO focuses on three sectors that have high development impact: financial institutions, energy, and agribusiness, food & water. With an investment portfolio of EUR 6.2 billion, FMO is one of the largest European bilateral private sector development banks. www.fmo.nl

For more information, contact:

Paul Hartogsveld

Communications advisor (PR)
T: +31 70 314 99 28
M: +31 6 11 58 9127
E: p.hartogsveld@fmo.nl