Africa50 Overview

October 2017 No part of this document may be circulated, quoted, or reproduced for

distribution outside the Africa50 organization without prior written approval

of Africa50.

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Africa50 was created to help close the infrastructure gap in Africa

through private and PPP investments

▪ Africa50 was created as a vehicle to

complement the AfDB’s own

infrastructure investment funding

▪ Africa50 not only invests in fully

developed projects but also accelerates

the provision of infrastructure by

supporting project development in its

early stages

▪ Africa50’s mandate is consistent with

and supports the AfDB’s High Fives and

the Sustainable Development Goals

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Infrastructure spending in Africa, US $ bn p.a.

SOURCE: Infrastructure Stock and Spend Database; IHS; International Transport Forum

150

Gap: 30-40 p.a.

2025 required22025 projected1

110-120

▪ Overall funding need 2017-

25 estimated at US $1.2 tn

▪ Government and public

funding while critically

important, will not be enough

to bridge the gap

▪ Africa50 could unlock up to

US $50 bn in project value

through its equity

investments and value-add

capabilities

An illustration of the magnitude of the infrastructure challenge

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Limited

government

capacity to

implement

projects

Limited number of

early risk-takers

and credible

private players

Enabling

environment/

regulatory

constraints

Limited public

resources

Barriers to bridging the infrastructure financing gap

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Not enough well-

prepared projects

are ready for

financing and

implementation

Slow progress in

establishing

enabling

environments

conducive to PPPs

Early-stage

investors and

strong private

sponsors are wary

of Africa due to a

perception of high

risk

SOURCE: AfDB

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Budgetary

constraints and

inefficient use of

resources limit the

number of projects

the public sector

can fund

Public sector Private sector

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Existing Africa50 shareholders have made a strong commitment

in support of the organisation

▪ Funding from 23 African

shareholder-countries, the

AfDB, the Central Bank of

West African States (BCEAO),

and the Bank Al-Maghrib

(BAM) – US $ 812 mn

committed capital

▪ Continued support, including

non-financial, from our

shareholders is critically

important to Africa50’s success

▪ Africa50 recently welcomed the

countries of Guinea and the

Democratic Republic of the

Congo as shareholders

Africa50 shareholder countries

New Africa50 shareholder countries

TunisiaMorocco

Senegal

Mauritania

Mali

Burkina

Faso

Ghana

Cote D'Ivoire

Sierra Leone

Cameroon

Nigeria

Togo Benin

NigerSudan

Djibouti

Egypt

Madagascar

Kenya

Congo

Gabon

Malawi

The Gambia

Democratic

Republic

of the Congo

Guinea

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Africa50’s investment strategy has 3 main pillars

Africa50-Project

Development

seeks to grow a

pipeline of

bankable projects

▪ Africa50-Project

Finance provides

primarily equity and

quasi-equity capital

alongside strategic

partners

DEVELOP

A Pipeline of

Bankable

Infrastructure Projects

ACCELERATE

Private

Investment into

African

Infrastructure

MOBILISE

Public and

Private Sector

Funding

▪ Public and Private Investors with priority on

mobilizing long term savings managed by

institutional investors from within and outside Africa

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… with a unique core value proposition…

▪ Close relationships with African government shareholders

and the AfDB which are critically important in the infrastructure

development and financing process

▪ Jurisdiction-specific risk mitigation through high level public-

sector engagement

▪ Preferential access to deal-flow generated from project

development activities and through ongoing dialogue with its

African government shareholders

▪ Experienced investment team with a demonstrated track

record of deal-making

▪ Access to competitive finance, including long-term debt

from the AfDB and broader DFI community, as well as existing

concessional funding

▪ International best-practice ESG standards

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…. and priority focus in the Power and Transport sectors

African annual infrastructure investment needed

▪ The greatest

investment need in the

future will be in power

and transport (68%)

▪ Both sectors also have

significant economic

and transformative

impact

▪ Africa50 will contribute

to expanding PPP and

private financing in

today’s typically more

commercially viable

segments (e.g., power

generation, ports,

airports, logistics, toll

roads)

Projected

infrastructure

investment needs for

2025 (% of overall

total)68%

18%

14%

31%

37%

Telecom

Water

Transport

Power

US $150 bn

2025

US $ bn p.a. (%)

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Africa50 Project Development: Increasing Pipeline of Bankable

Projects

▪ Identify projects through network and

shareholder support

▪ Engage stakeholders along deal cycle

through relationships (shareholders,

government and private sector partners)

▪ Identify and resolve obstacles to move

projects to financial close

▪ Mitigate risk by innovative structuring and

financial appraisal

PD Value Proposition

▪ Typically take significant minority stakes in

projects or platforms

▪ Play an active role alongside main sponsor

except for surrogate sponsor engagement

▪ Partner with other developers to complement

value proposition when beneficial

▪ Remain more flexible and understanding of

African realities

PD Ownership Model

▪ Project Concept

▪ Feasibility (Technical, E&S, Business, Legal)

▪ Land acquisition, approvals and permitting

▪ Contract negotiation and structuring (Offtake,

EPC, O&M)

▪ Financing, guarantees and financial close

PD Project Cycle Positioning

▪ Operate following a venture capital model

▪ Deploy risk capital in early stages

▪ Balance profitability and development impact

▪ Develop a large portfolio of projects

▪ Return Target : modest return on investment

on portfolio basis to ensure sustainability

▪ Ticket Size: US $2-10 million

▪ Current Allocation:10% of Africa50’s Capital

PD Sustainability Model

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Africa50 Project Finance : Catalyzing Private Investment in

Projects and commercial infrastructure funds

▪ Source proprietary investments through

Africa50 Project Development and other

sources

▪ Engage stakeholders post financial close

through relationships

▪ Access AfDB and DFI community for

preferential debt

▪ Mitigate risk during construction and

operation phases in markets perceived as

high risk

PF Value Proposition

▪ Typically take significant minority stakes in

projects or platforms

▪ Play an active role regardless of the type of

investment

▪ Provide capital alongside strategic partners

▪ Invest in and sponsor private sector funds to

mobilize institutional investors capital

PF Ownership Model

▪ Construction

▪ Testing

▪ Initial operation

▪ Steady state

PF Project Cycle Positioning

▪ Operate following a private equity model

▪ Provide primarily equity and quasi equity with

flexible exit options depending on projects

▪ Focus on profitability primarily without

overlooking development impact

▪ Return Target : differentiated return on

investment based on risk, impact and location

▪ Ticket Size: > generally US $20 million

▪ Current Allocation: 90% of Africa50’s Capital

PF Sustainability Model

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Africa50’s investments will lead to multifold impact and

mobilisation of financing

Assuming Africa50 takes a 30% share

of the equity

Direct equity investments

Assuming Africa50 funds 30% of

project development costs

Project development

- illustrations not to scale -

Assuming Africa50 seeds 15% of the

fund, and the fund takes a 60% equity

stake

Equity investments through

commercial fund

Africa50 equity

investment$27m

Total equity

investment$90m

x11 multiplier

Total project costs$300m

Africa50 project

development

investment

$4.5m

Total project

development

investment

$15m

Total project

costs at

financial close

$300m

x65 multiplier

Total equity

investment at

financial close

$90m

Infrastructure fund

equity investment

$8m

Total equity

investment$90m

x38 multiplier

Total project

costs$300m

Indirect Africa50

equity investment

$54m

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Nova Scotia Solar Plant in Nigeria – investment committed in

December 2016

▪ A Joint Development Agreement with Scatec Solar, Norfund and Africa50, for development of

a 100MWDC solar power plant in Jigawa state, Nigeria. Total project cost will be about US

$150 mn, with financial close expected in 2018 and operations in 2019

▪ Africa 50’s role: project development and long-term equity partner (24.5%). Facilitate

interactions with Government entities and prospective lenders, particularly AfDB

▪ Strong partners: Senior debt will be provided by OPIC, Islamic Development Bank, and

AfDB

▪ Strong fundamentals: Reliable solar resources and direct access to the grid under a 20-

year Power Purchase Agreement with Nigerian Bulk Electricity Trading

▪ Strong development impact: The plant will produce about 200 GWh of power per year,

contributing to the state’s US $2 bn development plan, and helping Nigeria meet its climate

change commitments, with an estimated 120,000 tons of CO2 emissions avoided annually

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Benban solar PV projects– investment committed in May 2017

▪ A Joint Development Agreement with Scatec Solar, Norfund and Africa50, for development of

a 400MWDC solar power plant in Benban, near Aswan in Egypt. The projects were developed

under Round 2 of the feed-in-tariff (FiT) program. Total project cost will be about US $430

mn, with financial close expected in October 2017 and operations in early 2019

▪ Africa 50’s role: Project development and long-term

equity partner (25%), relationship with GoE

▪ Strong partners: Senior debt will be provided by

EBRD, Islamic Development Bank, and Islamic

Corporation for the Development of the Private

Sector

▪ Strong fundamentals: Excellent solar resources

and interconnection facilities funded by all Benban

FiT developers under a cost sharing agreement.

Power sold to Egyptian Electricity Transmission

Company under a 20-year Power Purchase

Agreement, backstopped by the Government of

Egypt

▪ Strong development impact: The plant will produce

about 900 GWh of power per year, avoiding 350,000

tons of CO2 emissions annually

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for your attention!