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AFC, FMO launch N2.36bn facility for investment in infrastructure

News » Business

Date: 30 January, 2013

Image: Nigerian-based Africa Finance Corporation, AFC.

Nigerian-based Africa Finance Corporation, AFC, yesterday, signed a N2.355 billion (US$ 15 million) agreement with the Dutch Development Bank – The Nederlandse Financierings-Maatschappij voor Ontwikkelings Landen N.V (FMO) for investment in critical infrastructure projects across Africa.

According to a statement by the AFC, the agreement has led to the launch of a project development facility, designed to make early stage investments in projects under development, pre-financial close, in the infrastructure sector across sub-Saharan Africa.

Speaking at the launch of the facility, Jurgen Rigterink, Chief Investment Officer, FMO, said the need for financing early stage risk in emerging markets can only be effectively addressed and fulfilled when institutions form strategic partnerships.

According to him, 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,” Rigterink said.

Also speaking, Mr. Andrew Alli, President & Chief Executive Officer, AFC, said the N2.355 billion 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.

He said 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,” he noted.

Alli maintained that the AFC offers a unique value proposition by providing early stage risk capital and advisory services to fast track infrastructure projects under development.

He said, “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.”

Alli noted that improved governance and macroeconomic conditions have not increased Africa’s share of global private infrastructure investment, despite the substantial and growing demand for infrastructure.

According to him, 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.

Continuing, he said, “AFC is an African-led multilateral financial institution, established in 2007, 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.”

Article Credit: Vangaurd Newspaper

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