Kpone’s finance is approximately 30% equity and 70% debt. Andrews, as the AFC’s project director, also coordinated finance from a consortium of nine private sector local and international commercial banks, development finance institutions, and export credit agencies.
“We have used some innovative financing structures,” he says. “On the debt side, we have had banks from southern Africa come into the deal with senior debt that has been backed up with export credit cover.”
He believes the future of energy infrastructure is positive as the banks begin to recognise that these are viable investment initiatives.
“I hope that they will see that the returns are quite attractive, and it is win-win as you are having a developmental impact and yet you are achieving good returns.”
Following financial close on 30th September, Infraco exited the project whilst three other investors joined the AFC and CHL investor group.
The three new equity investors at financial close are Sumitomo Corporation of Japan (a strategic technical partner that will lead the operations and maintenance of the plant), Africa Infrastructure Investment Managers – AIIM (a joint venture between Macquarie Group and Old Mutual Investment Group), and FMO (the Netherlands Development Finance Company, whose mission is to support private sector growth).
The AFC, as the debt finance arranger, also coordinated finance from a consortium of nine private sector local and international commercial banks, development finance institutions, institutional and export credit agencies.
“When I look at how we put it together, it was a global team, but it was African led.
“That was innovative. I think the model serves as a wake-up call for Africa as a different way to execute deals – it cannot be business as usual, it cannot be the same old tired structures.
“The changes that we are seeing across Africa,” he says, “are driven by economic growth, and obviously that demands more infrastructure services for its people. Wealth is being created and you have domestic investors that recognise that Africa is the place to invest.
“We have some way to go yet to say that we have made the infrastructure asset class attractive enough and safe enough for not only the banks, but I believe, as importantly, the pension funds to come in. We have to de-risk the projects sufficiently, and demonstrate that they, the energy infrastructure projects that Africa needs so urgently, make great long-term investment propositions.”
The corporation saw a 13% growth in its balance sheet in 2013, from $1.7bn to $1.9bn, and income rose to $87.3m.