What is the AFC and what does it do?

AFC is an African-led investment grade rated multilateral development finance 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.

What is the AFC’s strategy?

Through its unique hybrid structure of a multilateral institution with substantial private sector participation, the AFC acts as both a leading financier and adviser to its clients. It offers project, trade finance and structured debt, greenfield equity, and buy-out capital as well as fixed income products. It complements these products offerings with advisory capabilities in areas such as: project development, capital raisings and restructurings.

What sort of projects do you seek to help, and of what magnitude?

At AFC our mission is to help address Africa’s infrastructure development needs, while seeking a competitive return on capital for our shareholders. We therefore prioritise our sectors to those which simultaneously offer a significant development impact and a high profit potential. We originate and execute transactions in the power, transportation infrastructure, heavy industries, natural resources and telecommunications sectors.

What is the overall economic impact of AFC’S activities?

According to a recent report by PricewaterhouseCoopers, infrastructure spending in Africa is projected to grow from US$70 billion in 2014 to US$180 billion per annum by 2025. AFC’s funding and project development expertise have clearly never been more important or needed.

As an African-led international institution, the corporation combines the best of both worlds, adopting a pioneering approach to the funding and development of their projects. The projects detailed above have proved to have a lasting effect on the local economy but more than that, they also have the potential to act as a template for further developments in the sector; AFC intends to remain at the forefront of the sector going forward.

What, if anything, is AFC doing to accelerate infrastructure development?

Africa suffers from an ‘infrastructure paradox’ – where there are plenty of projects, and plenty of funds available in the global finance system, but only very few are bankable, and to resolve this, AFC is committed to identifying innovations that will accelerate investment into infrastructure.

One such innovation has been the creation of Platform Vehicles, where multiple assets are put into one investment vehicle in order to generate scalable infrastructure investment. This Platform Vehicle, or Holding Company, then sits on top of the operating companies (the merged assets) to oversee all activities.

AFC’s joint venture with Harith General Partners, perhaps the best example of this. Here, over 1,575 MW of combined gross operational, and under-construction energy generation capacity, supplying power to over 30 million people across 10 countries, were merged.

By merging the key companies within our respective power asset portfolios, we have been able to create a dedicated company that is able to attract the high levels of investment necessary to plug Africa’s energy gap. This model is one we shall seek to replicate across the various sectors in which we operate in order to accelerate infrastructure investment levels.

Who does AFC compete with in this space?

Given the scale of the Africa infrastructure investment requirement, AFC works in partnership and collaboration with various developers, financiers and banks in the infrastructure space, including: long-standing DFIs like African Development Bank (AfDB), International Finance Corporation (IFC) and Africa Export Import (Afrexim) Bank, Regional and European Development Finance Institutions, Private Equity Funds, local and international commercial banks, international Export Credit Agencies, and global investment banks.

How does AFC select its partners?

Among other criteria, AFC focuses on working with partners with strong operational capacity, a demonstrable commitment to African development, clear track record and history, and a compelling value add.

Who owns the AFC?

AFC is private sector majority owned and managed, Institutional shareholders include:
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You are majority backed by the private sector. Can you tell us who your backers are? Who are the various African financial institutions?

AFC is private sector majority owned and led. Our shareholders include the Central Bank of Nigeria, various African financial institutions and other industrial and corporate shareholders.  The Chairman of our Board of Directors is Dr. Sarah Alade, who is currently Deputy Governor, Economic Policy of Central Bank of Nigeria (CBN). The anchor capital for the start-up of the corporation came from the Central Bank of Nigeria, whose current shareholding of just over 42 percent will reduce over time as other African States and other Public sector Institutions come on board. African financial institutions currently make up 48 percent of our shareholders (United Bank of Africa, Access Bank, First Bank, Zenith Bank, Union Bank Nigeria, Ecobank), with African industrials and corporations holding close to 10 percent. Each of these groups contributes significantly to the makeup and operations of the institution. The public sector shareholding gives AFC important access to government, which is critical in Africa for sustainable investments in infrastructure. Having African financial institutions so actively involved promotes synergy between African banks, broadens our reach and strengthens local support and partnership. The African industrials and corporations on our board help integrate local corporate experience, and strengthen support from leading local sponsors.

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Does AFC require further investment? Is it targeting new shareholders?

With regards to our funding, we successfully secured financing facilities totalling over (US$1.79 billion) from Rand Merchant Bank (RMB), Deutsche Investitions-und EntwicklungsgesellschaftmbH (DEG), the Netherlands Development Finance Company (FMO), and the Society for the Promotion and Participation for Economic Cooperation (PROPARCO), European Financing Partners (EFP). Islamic Development Bank (IDB) and KFW Development Bank.

We also debuted on the international syndicated loan market with an oversubscribed 2-year US$250 million term loan facility. In 2015 AFC concluded its debut US$750 million 4.375% 5-year international bond. The final order book was more than six times oversubscribed at over US$4.7 billion from a total of 315 investors. The borrowing program will continue in order to further support our growth plans.

 

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