FMO Renews Commitment To Emerging Africa Infrastructure Fund

The Emerging Africa Infrastructure Fund (EAIF), managed by Investec Asset Management (IAM), today announced that it has successfully completed its latest fundraising round, raising US$385mn in new long-term debt capital to invest in Africa.  The new funds will be used over the next five years to continue EAIF’s core strategy of mobilising private sector capital for investment in infrastructure projects, mainly in fragile states.

Allianz becomes EAIF’s first commercial institutional investor

• AfDB returns as an African DFI lender; Standard Chartered, FMO renew commitment to Fund
• KfW as a long-term partner remains the biggest debt capital provider to EAIF
• Renewable energy is set to be at least 50% of EAIF’s energy portfolio

The lending group on the fundraising are existing lenders KFW, the German development bank, FMO, the Dutch development bank and Standard Chartered Bank. The African Development Bank (AfDB) returns as a lender. For the first time, EAIF has attracted a large commercial institutional investor in global insurer Allianz.

EAIF is part of the Private Infrastructure Development Group (PIDG), a donor-backed organisation that encourages private sector infrastructure investment in the world’s lowest-income countries. PIDG blends public and private finance to reduce investment risk, promote economic development and combat poverty. Allianz’s investment in EAIF marks the start of a drive by PIDG companies to attract greater levels of funding from institutional and commercial sources.

Since its foundation, EAIF has invested around US$1.3bn, which has been instrumental in attracting over US$10.9bn of private capital investment to over 70 projects in some 22 Sub-Saharan African countries. The EAIF portfolio has also been mapped against the UN’s Sustainable Development Goals, ensuring that projects can directly, demonstrably and quantifiably contribute to positive impact across the continent.

As a leading proponent of innovative impact investment, Allianz, one of the world’s leading insurers and asset managers, is financing €75mn and US$25mn, both over 12 years, as EAIF’s first commercial institutional investor. The EAIF debt financing was run by Allianz Global Investors (AllianzGI) on behalf of Allianz Group investing for their insurance portfolios.

“We believe in Africa’s growth potential and will invest across different asset classes across the continent. The partnership with EAIF and Investec Asset Management is an important contribution to this initiative and illustrates how to create attractive risk and return profiles with the necessary downside protection for our policyholders”, says Sebastian Schroff, Global Head of Private Debt, Allianz Investment Management.

Nadia Nikolova, Director, Infrastructure Debt at Allianz GI says: “We are delighted to put our infrastructure debt expertise to work to help facilitate Allianz’ investment strategy in Africa.  Over the last five years, our global infrastructure debt platform has invested over €10bn into infrastructure projects across the globe.  As Africa unlocks its economic potential, the continent will become increasingly important for institutional investors.”

As a returning lender to EAIF, the African Development Bank (AfDB) is providing a total of US$75mn over ten years. Standard Chartered Bank is increasing and extending its existing lending to US$50mn. Underlining its continuing support, KFW is contributing US$50mn and €75mn, both over 12 years, and FMO is lending US$50mn over 10 years.

“We are pleased to expand our commitment to the EAIF. This partnership and the investments in renewable energy and cleaner technologies strengthen economic development across large parts of the African continent and improve the quality of life of those living there, “says Helmut Gauges, Head of the Africa/Middle East Directorate at KfW Development Bank.

Since winning EAIF’s fund management mandate in 2016, Investec Asset Management has delivered all of the key performance indicators set for the Fund.

Nazmeera Moola, Head of EAIF at IAM says, “Bringing the vision and support of a lender of Allianz’s calibre on board represents a milestone in terms of mobilising private capital into infrastructure projects across the continent. This debt raising exemplifies the gains to be made from PIDG’s blended finance approach.  IAM has a successful track record of co-investing private and public funds side by side in both private credit and private equity funds in Africa.

“EAIF ended 2017 with ten new transactions signed, representing cUS$200mn in loan commitments and bringing EAIF’s committed loan portfolio to US$750mn. The Fund is rapidly approaching having 45 active projects in its portfolio, making it one of the leading suppliers of debt finance to private sector infrastructure projects in sub-Saharan Africa.”

“EAIF has established itself as a financial partner of choice for lenders and borrowers as part of the wider set of products PIDG offers,” says Fund Chairman, David White. “Now in our 16th year of operations, we have a proven track record of successful impact investment. Our success has attracted very high quality new investors and given our loyal established lenders strong reasons to continue supporting us. The completion of the latest fundraising is a clear endorsement of the PIDG’s public private partnership model in the economic development of Sub-Saharan Africa.”

Energy portfolio to emphasise renewables

The Emerging Africa Infrastructure Fund is able to invest in eight infrastructure sectors. In addition to areas like transport, water and telecommunications, EAIF is now well-established as a skilled provider of debt to solar and renewable power projects.

The World Bank estimates that if Sub-Saharan Africa’s economies had dependable electricity, GDP growth across the region could be up to 2% higher per annum than current rates. In addition to the need for electricity is the increasing drive towards renewable energy.

“Combatting climate change is an important priority for our donor nations, says EAIF Executive Director, Emilio Cattaneo. “Harnessing renewable energy sources, particularly solar, is the most sustainable and quickest way of bringing power to countries that need infrastructure to encourage business growth, jobs and stability.”

In 2017 alone, EAIF provided finance to independent power producers that will bring 90MW of new solar power to Africa. Since 2015, it has backed renewables projects in Mali, Mozambique, Rwanda and Uganda.

Energy generation and its allied infrastructure at present accounts for some 50% of EAIF’s loans portfolio. In future it aims to have at least 50% of its power portfolio invested in renewables.

– AVCA