IFC IN INFRASTRUCTURE IN SUB-SAHARAN AFRICA. Femi Akinrebiyo Principal Investment Officer

Transcription

1 IFC IN INFRASTRUCTURE IN SUB-SAHARAN AFRICA Femi Akinrebiyo Principal Investment Officer May 31, 2017

2 TABLE OF CONTENTS 1. Overview of IFC s Africa Infrastructure business 2. New approaches to grow the pie and increase impact 3. A track record of bringing projects to financial close 4. Annex: Case Studies 1

3 US$ s 1 Overview of IFC s Africa Infrastructure Business A market-leading franchise in Core Infrastructure in Africa We ve built a strong business a leading market position Average Annual Volume and Project Count for Infra Africa* Projects which closed in SSA in 2014 and 2015 (excl. South Africa) 1,200 1, Declined, FY05-07 FY08-10 FY11-13 FY14-16 Commitments - own acc. Project count Commitments - mobilization Missed, 1 Financed by IFC, 21 We invest in close to 75% of projects closing and in 95% of those which we wish to be involved in We are systematically playing a Lead Arranger role closed multiple transformational projects and have been a path-finder in many markets Senegal Uganda Côte d Ivoire First reform-era IPP in Nigeria Scaling Solar South Africa s first 2 CSP IPPs 2

4 1 Overview of IFC s Africa Infrastructure Business Our Africa Infrastructure business spans a range of sectors and countries We are pushing forward landmark transactions thanks to our staff deployed across continent Washington D.C. (15 staff) Solar in the Sahel Railway in Guinea Power in Sierra Leone Port & wind in Ghana Power in Nigeria Hydro in Cameroon Wind IPPs in Kenya & Tanzania Scaling Solar in Zambia Dakar (13 staff) Lagos (4 staff) Accra (3 staff) Nairobi (6 staff) Railway in Gabon Madagascar solar & airports Power and transport in Mozambique Johannesburg (7 staff) CSP in South Africa Delivering on over 40 live mandates These include high-impact transformational projects as well as ones in Fragile States ~50 professionals dedicated to core infrastructure, of which 70% based in Africa. A diverse skill set of project finance professionals 3

5 1 Overview of IFC s Africa Infrastructure Business IFC can offer its clients a full range of financial products Up to 25% (Greenfield) or 50% (Expansion) of Total Project Cost through a combination of: Development Equity Up to $8 or 50% of development budget through IFC InfraVentures (IV) IFC InfraVentures can act as co-developer: assist in negotiation of agreements, feasibility study evaluation, financial modeling Project Equity Typically up to 20% stake for IFC s account; more if needed through IFC Asset Management Company Usually Long-term investor and exit strategy is agreed with key stakeholders Mezzanine Subordinated loans, Income participating loans Convertibles and other hybrid instruments Senior Debt and Structured Products Senior Debt and Guarantees Fixed or floating rates (US$ or Euro); can also finance in some local currencies Commercial rates, structured loans Long maturities (up to 20 years), grace periods and repayments commensurate with project cash flows Cross currency and interest rate swaps Tenor extension solutions for local commercial banks IFC can play multiple roles and can invest at a very early stage 4

6 1 Overview of IFC s Africa Infrastructure Business..alongside substantial debt and equity mobilization capabilities Debt Mobilization Equity Mobilization B loans 1 LA signed by the Borrower and IFC; IFC acts as of record for both A and B Loans; Loan participants benefit from IFC privileges and immunities; Better pricing and tenors than otherwise available, preferred creditor access to foreign exchange; Withholding tax exemption Underwriting Syndicated financing and yet faster financial close IFC undertakes the risk of raising additional capital Possibility to cover entire debt portion of project financing Parallel loans IFC works with a group of 8 DFIs under a Master Cooperation Agreement (MCA) Enhanced access to DFI and local funding; Improved coordination and simplified debt structure; Significant time and cost savings. Co-Lending IFC established a Managed Co- Lending Portfolio Program to mobilize funds from institutional investors Early stage financing available matching IFC A Loan terms 1 LA signed by the Borrower and IFC Withholding tax exemption Asset Management Company Enhanced access to institutional investors through eleven funds with $8.7bn under management Additional equity window mitigating IFC exposure limits AMC has access to IFC pool of talent and expertise IFC has extensive experience acting as MLA for commercial lenders/ DFIs and can commit substantial debt at mandate 5

7 TABLE OF CONTENTS 1. Overview of IFC s Africa Infrastructure business 2. New approaches to grow the pie and increase impact 3. A track record of bringing projects to financial close 4. Annex: Case Studies 6

8 US$ bn 2 New Approaches to Grow the Pie & Increase Impact Despite recent economic growth, project finance activity has been muted Africa has grown faster than most other EMs Emerging and developing Asia Middle East and North Africa Emerging and developing Europe Latin America and the Caribbean Source: IMF Average Annual Change in Real GDP, Sub-Saharan Africa World CIS Advanced economies 1.5% 4.1% 3.8% 3.5% 3.4% 3.4% 5.5% and the short-term outlook is challenging. 8.2% Bearish commodity prices creating macroeconomic strain in many countries Political & Government-related risks constrain our ability to execute on transactions Security challenges, affecting project costs and timelines. but there has been no sustained growth in private investment in infrastructure 7,000 6,000 5,000 4,000 3,000 2,000 1,000 - Total Investment in Projects with Private Participation in SSA ex. South Africa Source: World Bank To break the impasse, IFC is 1) Engaging earlier in the project life cycle going upstream 2) Moving beyond our comfort zone - Fragile States 3) Innovating with new products - Scaling Solar Source: World Bank Group,

9 2 New Approaches to Grow the Pie & Increase Impact IFC is intervening with different tools and engaging in projects very early on Improving the enabling environment Developing Projects Closing Projects Upstream engagements Early stage equity (InfraVentures) Debt, Mezz. and Equity Financing Sector wide engagements across the value chain Partnerships with key stakeholders including Goverments Close cooperation with the World Bank US$150 fund for early stage development risk in infrastructure projects Up to $8 of contributions to development costs per project Conversion of development costs into equity at Financial Close Multiple products offered and processed in parallel: for IFC s own account: senior debt, mezzanine financing, equity, hedging instruments mobilization products: underwriting, B loans, parallel loans and co-investment funds Upstream structuring of transformational projects (e.g. sector reform in Nigeria) IFC is co-developing a landmark hydropower project in Cameroon with EDF Circa US$1 billion of financing committed across Sub-Saharan Africa p.a. What s next : Advocacy / pushing further for better sector governance Expanding our de-risking tool box 8 8

10 2 New Approaches to Grow the Pie & Increase Impact Upstream engagements: WBG Energy Business Plan in Nigeria Comprehensive Reforms Stream-Line and Scale-Up Investments Reduce Losses and Enhance Access Gas Supply Generation Transmission Distribution / Access Major Outcomes Analytical work TA for reform program 1-2 NIPPs provided gas supply Gas pipeline/cpf investment Focus on unblocking supply Major Outcomes 4-5 Gas to Power IPPs 1-2 Solar IPPs Focus on self-sustaining credit worthy market and solicited auctioning Major Outcomes Corporate reforms at TCN $700m facility for TCN urgent public investments in rehabilitation and expansion TCN PPP type investments Focus on leveraging private capital Major Outcomes $500m DISCO credit facility DISCO long-term capex investment Grid access tools/policy/ta Off-grid access credit facility / TA Focus on last mile service delivery Gas available for power 2.5 bcf/d Available capacity of 10 GW Wheeling capacity of 10GW 5m additional people reached Commitments to date Seven Energy: Equity and bond investor Azura Edo IPP: First reform era IPP in country; debt and guarantees Wapsila IPP: Development equity MBSO Solar IPP: Development equity Overall Target: Strong Nigerian power sector with at least 10GW available capacity by

11 2 New Approaches to Grow the Pie & Increase Impact Developing projects: Large hydro in Cameroon through IFC InfraVentures Cameroon Nachtigal Early equity: $8 Co-Developer 2013 A 420 MW run-of-river hydropower project (guaranteed capacity of 270 MW) to be developed downstream of Lom Pangar (regulating dam) and approximately 70 km north of Yaoundé. A least cost option and a critical source of additional supply for Cameroon. Under joint development by EdF, the Government of Cameroon, Rio Tinto Alcan and IFC. Expected timeline from IFC engagement to Financial Close: 30 months. IFC s Expertise Transaction Highlights Structuring: IFC is heavily involved in structuring a balanced, sustainable and bankable project; Sector: IFC has in-depth relationships with government & sector stakeholders given its prior key investments in the Cameroon power sector (Kribi & Dibamba IPPs, Sonel distribution company); Environmental & Social considerations: intrinsically critical to all large hydropower projects. Transformative for Cameroon through: Its size (Nachtigal accounts for roughly a third of the country s current total installed capacity) Its expected low cost of generation; The replicability of its structure - Nachtigal will be the 1 st hydropower project to benefit from the Lom Pangar regulating dam. 10

12 2 New Approaches to Grow the Pie & Increase Impact Opening up tough markets: Fostering projects in Fragile and Conflict-Affected States Fragile & Conflict-Afflicted States (FCS) offer a huge potential but require intensive, long term engagement, innovative approaches and a higher risk appetite. SSA is home to most Fragile and Conflict-Affected States. We are innovating and engaging upstream in FCS We are exploring ways to leverage public / blended financing An example: IFC InfraVentures in Mali Deploy risk capital and know-how to support innovation in energy access and off-grid Project development & upstream work through InfraVentures (Mali), PPP Advisory (Congo, Liberia) and Scaling Solar in selected FCS markets Early engagement through phased mainstream mandates (e.g. IPP in Sierra Leone) Capital buy-downs to address affordability gaps; blended finance to close project viability gaps Flexible risk mitigation instruments and guarantees to cover noncommercial risk and mobilize private investment Grants to facilitate government access to world class advice, technical capacity during deal negotiations Lead role in developing two landmark renewable energy projects: 33 MW Scatec Solar and 42 MW Kenié dam. Projects will increase Mali s generation capacity by 30%, while diversifying the country s generation mix. Both projects have signed PPAs and are now moving toward financing. 11

13 2 New Approaches to Grow the Pie & Increase Impact Replicating bankable structures & procuring competitive clean power: The Opportunity Utility-scale solar PV can now be built at or below grid parity in Africa Africa benefits from excellent irradiation levels, yet many countries depend on fossil fuels Solar can be built in 3-6 months Scaling Solar is a one-stop-shop for Governments to rapidly mobilize competitive privately funded grid connected solar projects within 2 years. The Product It brings together several World Bank Group services under one engagement: Advice to assess the right size and location for power plants. Simple and rapid tendering to ensure strong competition. Standardized, balanced project documents to speed up procurement. Competitive financing and insurance available to all bidders. Risk management and credit enhancement products to deliver lower tariffs. The Innovation The Results One packaged solution for Governments and Developers One standardized suite of documents creating a large scale market Coordinated delivery by the WBG Already underway in 3 countries: Zambia, Senegal and Madagascar Auctioning in Zambia resulted in record low price of 6.02/KWh, the cheapest solar power in Africa Further support very welcome from key shareholders 12

14 TABLE OF CONTENTS 1. Overview of IFC s Africa Infrastructure business 2. New approaches to grow the pie and increase impact 3. A track record of bringing projects to financial close 4. Annex: Case Studies 13

15 3 A Track Record of Bringing Projects to Financial Close Select IFC Commitments in Conventional Power in Sub-Saharan Africa* Senegal Senegal Senegal Ghana Togo Uganda Comasel Equity: $0.8 Tobene Equity: $4 A Loan: $38 B Loan: $67 Parallel Loans: $20 Cap des Biches IPP Swap: $9 mn Parallel Loans: $91mn Takoradi 2 A Loan: $80 Parallel Loans: $52 Contour Global Equity: $14 Umeme Ltd A Loan: $70 Equity: $10 Investor 2011 Investor, MLA 2013, 2014 MLA 2015 Investor 2010 Investor,, 2013 Côte d Ivoire Côte d Ivoire Kenya Kenya Azito IPP Ciprel IV KPLC Thika Power A Loan: $125 Parallel loans: $220 A Loan: 100 Parallel loans: 175 A Loan: $50 A Loan: 28 Parallel loans: 56 Sole Lead Arranger Sole Lead Arranger & Global Coordinator 2013 Nigeria Nigeria Kenya Azura Edo IPP A Loan: $80 C Loan: $30 Parallel Snr Loans: $178 Parallel Mezz. tranche: $35 Co-MLA(DFI senior debt tranche) 2014 * select IFC commitments in the period FY10-16 Ewekoro IPP Equity: $2.5 Investor 2014 Cameroon Dibamba A Loan: $ Cameroon KPDC A Loan: 64 Parallel loans: 70 Mandated Lead Arranger 2011 Gulf Power A Loan: 17 B Loan: 21 C Loan: 4 Parallel loan: 21 Arranger 14

16 3 A Track Record of Bringing Projects to Financial Close Select IFC Commitments in Renewable Energy in Sub-Saharan Africa* Mali Mali Cameroon Africa Region Kenié Hydro Scatec Ségou Nachtigal Lekela Power Equity: $2 Equity: $1.4 Equity: $8 Equity: $22.5 IFC Managed Funds Equity: $37.5 Investor 2011 Investor 2014 Investor 2013 Investor, 2016 West & Central Africa Nigeria Kenya Kenya Scatec Solar Kipeto Energy Lamu Wind Equity: $1.5 MBSO IPP Equity: $1.5 Equity: $2 Equity: $3 Investor Investor 2015 Investor 2013 Investor 2013 South Africa South Africa South Africa Tanzania Abengoa KaXu Abengoa Khi A Loan: $57 A Loan: $76 Amakhala Wind C Loan: $12 Blended Finance: Parallel loans:$220 $26 A Loan: $64 Blended Finance:$15 C Loan: $7 Mandated Lead Arranger 2013 * select IFC commitments in the period FY10-FY16 Singida Equity: $4 Investor 15

17 3 A Track Record of Bringing Projects to Financial Close Select IFC Commitments in Transport in Sub-Saharan Africa* Senegal Burkina Faso Burkina Faso Rwanda Africa Region Dakar Toll Road (SENAC I & II) A Loans: 30 C Loans: 20 Parallel loans: 88 AKFED Aviation A Loan: 25 BBCOM INT. A Loan: $2.5 Intraspeed C Loan: $7.5 ASECNA A Loan: $36 Global Coordinator & Lead Arranger 2010, Cote d Ivoire Kenya Kenya, Uganda IAS A Loan: $5 Kenya Airways Equity: $25 Rift Valley Railways A Loan: $22 C Loan: $ Investor 2006 Ghana Togo Gabon Cameroon Tanzania MPS Tema Port A Loan: $195 Syndicated Loans: $472 Sole Lead Arranger 2016 Lome Container Terminal A Loan: 85 Parallel loans: 170 Sole Lead Arranger 2011 SETRAG. A Loan: $50 Parallel Loans: $61, Lead Arranger 2016 AEF 3T Cameroun A Loan: $ TRL A Loan: $ * select IFC commitments in the period FY05-FY16 16

18 TABLE OF CONTENTS 1. Overview of IFC s Africa Infrastructure business 2. New approaches to grow the pie and increase impact 3. A track record of bringing projects to financial close 4. Annex: Case Studies 17

19 4 Annex: Case Studies Case Study #1: Cote d Ivoire rapid expansion of installed capacity Azito Cote d Ivoire A Loan: $125 Parallel loans: $220 & Sole Arranger October Ciprel Cote d Ivoire A Loan: 100 Parallel loans: 175 & Sole Arranger August 2013 Largest operating gas power plants in Africa (543 MW MW) Expansion of both plants and conversion to combined-cycle technology => additional 1,800 GWh/year of green power, lowest cost IFC played Sole Lead Arranger roles on both projects, mobilizing ~$700 of debt in 2 years IFC s Engagement in Cote d Ivoire Power Sector Involved since the early 90s (financing of the first two IPPs) Immediate re-engagement after end of political crisis (May 2011) In-depth work on and key role in restoring the financial sustainability of the sector Designing a recovery plan and building consensus with the Government Catalyzing and executing 2 major power plant expansions within 2 years Results IFC-financed projects now make up over half of Côte d Ivoire s generation capacity Both projects completed on time and on budget, and now operating well Market recognition: in 2013 Azito was awarded Power Deal of the Year by the Infrastructure Journal and African Power Deal of the Year by Project Finance International. 18

20 4 Annex: Case Studies Case Study #2: Bujagali, Uganda Africa s first large private hydropower project Uganda Bujagali Energy Ltd. A Loan: $100 C Loan: $30 December 2007 Construction of 250 MW hydro plant on the River Nile, Uganda, with a project cost of US$900. Developed, owned and operated by Bujagali Energy Ltd. (Sithe Global Power, NY and IPS Kenya) Sells energy to Uganda National Transmission Company (UETCL) under a 30-year PPA backed by a Government Guarantee. Timeline: Long term sector & project development engagement since late 1990s; 2 years between Sponsor selection and Financial Close; plant was commissioned in July. IFC s Role Transaction Highlights Key arranging and structuring role among large co-lender group during the financing of the project (AfDB, EIB, FMO, Proparco, AFD, DEG, KfW and syndicate of commercial banks for a total of c. US$700 ) Large financier: IFC provided a US$100 senior ( A ) loan and US$30 subordinate C Loan, with 16 and 20 years tenor respectively Project benefits from an IDA Partial Risk Guarantee for the benefit of the commercial banks syndicate IFC continues to support the Ugandan power sector with investments in the distribution sector (Umeme). Sub-Saharan Power Deal of the Year award 2007 by Project Finance Magazine Africa s first private large hydropower project Uganda s first IPP; has increased the country s permanently installed capacity by +50% 19

21 4 Annex: Case Studies Case Study #3: REIPP Procurement Program, South Africa South Africa Abengoa KaXu A Loan: $76 Blended Finance: $26 Abengoa Khi South Africa A Loan: $57 mn C Loan: $ 12 mn Parallel loans: $220 mn Blended Finance: $15 mn Mandated Lead Arranger South Africa Amakhala Wind A Loan: $64 C Loan: $ South Africa Abengoa Xina A Loan: $ IFC has invested ~US$260 for its own account in South Africa s REIPP program. In addition to providing direct senior and subordinated debt, IFC has arranged additional senior and subordinated financing (~US$260 mn). IFC Role in the Khi Transaction Results of the Khi Transaction Leading role among a large co-lender group during the financing of the project (EIB, FMO, Proparco, DBSA and IDC) IFC provided a ZAR 500 A loan and ZAR 102 C Loan, with 18 years tenors. IFC also provided a concessional subordinated loan of US$ 15, as the implementing entity of the Clean Technology Fund (CTF) Market recognition: awarded deal of the year Renewable by Infrastructure Journal and Solar Deal of the year by Project Finance Magazine One of the first large scale CSP projects in Africa. At 50 MW, was larger than any other operating tower based CSP plants globally at the time of its financial close (Nov ) 20

22 4 Annex: Case Studies Case Study #4: Umeme, Uganda taking on the distribution challenge Uganda Uganda Uganda Umeme is the largest electricity distribution company ( DISCO ) in Uganda, and one of the few well performing privately owned DISCOs in Africa; Umeme Limited A Loan: $25 Umeme Limited IPO Participation: $5 Umeme Limited A Loan: $75 The Company currently holds the concession for electricity distribution in Uganda until 2025; 2009 IPO Participant & Lead Arranger 2013 The key sponsor is Actis, with whom IFC has a close relationship IFC has a long term relationship with Umeme dating to 2009 IFC s Role Helped finance Umeme s $420 Mn capex program targeted at loss reduction and network expansion; Participated in Umeme s IPO, the largest in Uganda s history; Worked with other parts of the WBG to help Umeme adopt best international practices; Brokered a dialogue between the company and its stakeholders through periods of regulatory uncertainty. Results Umeme's investment program has contributed to an : Increase in access to electricity Impressive reduction in technical and commercial distribution losses, Improvement in the quality of services to end users through the improvement of the distribution network; Umeme s IPO in 2013 was the largest in Uganda s history and contributed to the development of local capital markets; Umeme s shares were subsequently cross listed on the Nairobi Stock Exchange. 21

23 4 Annex: Case Studies Case Study #5: Dakar, Senegal SSA s first toll road (ex-rsa) IFC s Role Senegal SENAC I & II A Loans: 30 C Loans: 20 Parallel loans: 88 Global Coordinator & Lead Arranger 2010, 2014 IFC financed the original and extension phases of SENAC, a develop, build, finance and operate (DBFO) concession for a toll-road from Dakar city to its new international airport ( AIBD ). Sponsored by Eiffage SA, one of France s main toll road operators, and carried out by its wholly owned project company, SENAC. Complex project in which the World Bank (IDA) supported the public financing component of the PPP and IFC played a Global Coordinator and lead financier role in the raising of private finance. Transaction Highlights Phase I: Dakar Diamniadio (24 km) Making the Cash Flow Work : (i) Long Tenor Senior Debt Tranche (15 years); and (ii) 15-y Subordinated Loan with a 10-year grace period Strengthening the Concession Contract Dealing with traffic risk Managing E&S Issues (relocation of 30,000 people) Reaching financial close in just 8 months door-to-door Phase II: Diamniadio AIBD (17 km) Reprofiling existing project debt Structuring a comprehensive financing package Lead Arranger and Global Coordinator role First private toll road in Sub-Saharan Africa outside South Africa Major impact in reducing trip durations (from 2 hours to <30 minutes) and traffic congestion into and out of Senegal s capital city. Phase I commissioned on time and below budget, with traffic and revenue performance considerably above forecasts. Demonstration effect: shows the potential for wellstructured toll road PPPs to reduce traffic woes in Africa s rapidly urbanizing environment. 22

24 4 Annex: Case Studies Case Study #6: Lomé Container Terminal a key transshipment facility for West Africa IFC s Role Togo Lomé Container Terminal A Loan: 85 Parallel Loans: A greenfield, deepwater transshipment container facility with annual capacity of 1.5 TEUs, serving the entire West and Central Africa (WCA) region and acting as a gateway to landlocked markets (Mali, Niger, Burkina Faso, northern Nigeria) Concession held by Global Terminal Limited, which is owned by Terminal Investments Limited and China Merchants Holdings Limited, the largest public port operator in China. Terminal Services Agreement signed with Mediterranean Shipping Company (MSC) guaranteeing minimum handling volumes. Transaction Highlights Reduced political and regulatory risk Established relationships with government One of the primary reasons the client approached IFC Structuring expertise / Honest broker role: bringing parties together to develop a bankable & sustainable solution Global port sector expertise: IFC has extensive experience in project financing container terminal projects across emerging markets and has deep relationships with the major players. Long-term partnership perspective IFC is currently considering the provision of additional financing to complete construction of the facility. Project is a game-changer by enabling MSC (and other shippers) to deploy larger 9,000+ TEU vessels to WCA and fundamentally alter the region s shipping cost structure and patterns. New hub-and-spoke fleet deployment provides large cost benefits: Shipping lines can cover the West Africa market with fewer, larger vessels Significant reduction in per-teu carrying cost as the larger TEU vessels have >3x capacity of current vessels but only moderately higher opex and capex. 23

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