Changing the Game for African Infrastructure

Africa50 Overview March 2017 Africa50’s mission

An innovave instrument for transformaonal change in infrastructure development and financing in Africa

2 Strategic Objecves

§ Become the leading strategic investor in commercially viable and financially aracve private and PPP infrastructure projects in Africa

§ Increase the number of bankable private and PPP infrastructure projects in Africa

§ Raise significant capital from public (government and government related) and private sources, with private funds significantly exceeding public funds over me.

§ Tap long term savings from within and outside the connent by creang an asset class aracve to instuon investors

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3 Africa50 has been successfully established

• Incorporated in Casablanca IFIs, Public African Private Financial states investors Instuons • Legally and financially independent

• Two separate companies: Project Development and Project Finance

• Three classes of investors:

o African states Africa50 - Africa50 – 1 2 Project Project Development Finance o Internaonal financial instuons Early stage Investment risk capital in bankable funding projects o Pension funds, sovereign wealth funds, and private Project Project sector enes Company Company • Target capital: $3 billion

4 Africa50 has reached a milestone and fundraising connues

Target $3bn ~$2bn

$830m ~$170 m

Fundraising stage August 2016 End of 2016/ Final close Early 2017 Investors AfDB, , , Other African African states, , Congo, Côte states, central Central banks, DFIS, d’Ivoire, Djibou, , banks, DFIs Private investors , , (sovereign wealth , , funds, insurance , , , companies, pension , , funds etc.) , , , , , , , Bank Al Maghrib, BCEAO

5 African infrastructure suffers from a large financing gap

Project development financing gap

Annual infrastructure financing gap $6.5 bn $130 bn Addional Addional $2.5 bn funding $50bn investment needed needed

$80 bn $4.0 bn

Average annual Current investment need investment (2015) (2016 - 2025) Average annual Current project project development development funding need spending (2016 - 2025) (2015)

Source: ICA, McKinsey ‘Lions on the move (2016)’, Africa50 esmates 6 Barriers to bridging the infrastructure financing gap

1 2 3 4 Enabling Limited number of Limited government Limited public environment/ early risk-takers and capacity to resources regulatory credible private implement projects constraints players

Budgetary Not enough well- Slow progress in Early-stage constraints and prepared projects establishing investors and strong inefficient use of are ready for enabling private sponsors resources limit the financing and environments are wary of Africa number of projects implementation conducive to PPPs due to a perception the public sector of high risk can fund

Public sector Private sector

Source: AfDB 7 Africa50 as a bridge between the public and private sectors

Leverage government and AfDB Become a leading African ownership to support investees infrastructure investor

• Substanal government ownership • Improve infrastructure in Africa by combined with private sector developing bankable projects and management catalyzing investments into shareholder o Construcve relaonships with countries government shareholders • Leverage public funds to raise private Clear mandate to aract private o capital from long term instuonal investors by generang market based investors in Africa and elsewhere returns on equity

• Strong sponsorship from the AfDB • Operate commercially with an appropriate financial return while • Support from other development banks promong economic development

8 Africa50’s comparave advantage

Integrated approach Scalability A one stop-shop for all project An investment plaorm designed to stages, including early stage grow over me to support project development increasing financing needs

Speed Flexibility A private sector approach A nimble organizaon able to to the processing of adapt to public and private transacons sponsor needs

9 Africa50’s ability to leverage its investments

Project development Project financing

Assuming a 30% Africa50 share of project Assuming a 30% Africa50 share of equity development cost (illustraon not to scale) (illustraon not to scale)

Africa50 project $4.5m $27m Africa50 equity development investment investment

$15m Total project development investment

$90m Total equity investment Total equity investment $90m at financial close

Total project $300m Total project costs $300m costs at financial x65 mulplier close x11 mulplier

10 Africa 50’s target sectors and investment criteria

Target Sectors Selecon criteria

• Sectors • Only public-private o Priority: Power (generaon, partnerships and private transmission, distribuon and projects with good cash flow distributed power); transport predictability (airports, ports, roads, logiscs) o Other: ITC, water and sanitaon • Strong sponsor with solid technical and financial track • Instruments record o Early stage risk capital to develop projects • Adequate returns o Project development support to commensurate with the the government and private project risk profile investors o Equity and quasi-equity in • Significant development bankable projects impact

11 Nova Scoa Solar Plant in Nigeria

• 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 $150 million, with financial close expected in 2017 and operaons in 2018.

• Africa 50’s role: project development and long-term equity partner (24.5%). Facilitate interacons with Government enes and prospecve lenders, parcularly 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, contribung to the state’s $2 billion development plan, and helping Nigeria meet its climate change commitments, with an esmated 120,000 tons of CO2 emissions avoided annually.

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