Last week in brief… The energy sector grabbed the private capital investment headlines in Africa last week in what was otherwise a quietish week. As the year draws to a close, the volume of deals may have been slight, but some of the values anything but.
The Amandi Energy Consortium, which counts a number of private capital investors amongst its backers, announced that it has reached financial close for the Amandi Energy Power Plant in Aboadze, Ghana. Of the $552 million required, $134 million is being provided as equity by a group made up of Denham Capital-backed Endeavor Energy, Harith General Partners-backed Aldwych International as well as Harith’s Pan African Infrastructure Development Fund 2 and the Amandi Founder Group.
The debt financing component of the package, which is being provided by a mix of development finance institutions and commercial banks, includes a $250 million loan from OPIC, an $83 million loan from CDC as well as commitments from Nedbank and Rand Merchant Bank. Construction has begun and the plant is expected to be generating power by April 2019.
In a first for the institution, Africa50, the infrastructure investment fund backed by the African Development Bank and more than twenty African countries, has announced its first investment to support the development of an 80MW solar photovoltaic independent power project near Dutse, in Nigeria’s Jigawa state. No additional details of the structure and terms of the investment were disclosed.
On the energy fundraising front, the African Development Bank is seeding the Facility for Energy Inclusion, a planned $500 million pan-Africa renewable energy debt fund, with $100 million. The financing package will consist of $50 million in equity and a $50 million convertible senior loan to the fund, which is expected to hold its first close by the middle of 2017.
The fund will target opportunities to provide senior and mezzanine debt to off-grid, mini-grid and small scale Independent Power Producers developing projects which cost less than $30 million. Informal, preliminary discussions have already been held with potential investors from the USA, the UK, Germany, Japan and South Africa in a bid to encourage commitments for the remaining $400 million the fund is targeting.
In another off-grid deal, the IFC and Dutch development bank FMO announced they have joined Investec Asset Management in backing off-grid solar firm Mobisol with a little over $15 million. To date, Mobisol has installed more than 67,000 pay-as-you-go solar home systems in Rwanda and Tanzania, providing some 330,000 customers with cost-effective, efficient power for household and small business use. the fresh capital will support its expansion plans in its existing markets of Rwanda and Tanzania as well as its plans to start penetrating the Kenyan market.
In other IFC news, the DFI is making a $20 million equity investment in Hassan Allam Holding, one of Egypt’s largest private construction companies. In a Summary of Investment Information posted on the IFC's website earlier in the year, it revealed that the group had plans to use the capital to expand its equipment fleet and related facilities as well as take partial ownership stakes in several long-term infrastructure projects in Egypt.
Moving on to the agriculture sector, Dutch family office DOB Equity has made an investment for an undisclosed stake in Countryside Dairy, a Kenyan dairy-processing firm. As well as delivering hoped for financial returns, the investment fulfills one of DOB Equity’s other strategic commitments, namely increasing its social impact deal activity in the East African country. Countryside Dairy’s business model and focus concentrates on providing its pasteurized fresh milk to the underserved, low income segment of Kenya’s population.
In trend news, analysis by law firms Linklaters and Webber Wentzel points to another strong year in 2016 for South African outbound M&A. Last week they announced that there has been almost $7 billion worth of activity to date this year, and the total could reach more than $8.5 billion before the year ends. Outbound M&A by South African corporations peaked in 2007, when $12.5 billion in deals were transacted, a significant bump from the prior annual average of $4.4 billion. In 2016, corporations have ploughed 55% more into outbound deals, a clear sign that their appetite to source deals overseas is increasing.
And finally, as the popularity of mobile money alternatives to traditional banking surges on the continent, Africa’s banks are investing billions in developing digital banking technology solutions in order to compete with and differentiate themselves from the likes of M-Pesa as well as one another. The Wall Street Journal takes a look at the move and how the continent's banks are playing it.
Allan Cunningham is a senior media executive who has spent the last 15 years of his career working for some of the world’s most respected M&A and Private Equity media companies including Dow Jones’s publications Private Equity Analyst and VentureWire and most recently, The Deal. He has built a number of successful digital and event content businesses, both subscription and sponsor-supported, delivering information and content-marketing services to clients in the M&A and broader deal ecosystem. He recently struck out on his own and launched Rowayton Press, a multi-platform media company focused on the private capital opportunities in emerging and frontier markets. Mr. Cunningham holds a Bachelors degree from Liverpool John Moores University in the UK.
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