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Standard Bank leads new fund for Africa

Posted On Friday, 01 February 2002 03:01 Published by eProp Commercial Property News
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Contributors will pool at least 305m in long-term capital to finance building up of countries' infrastructures 











A New Africa fund, initiated by the UK government, will make at least $305m in long-term debt capital available to finance infrastructure in countries throughout Africa.

The Emerging Africa Infrastructure Fund, to be managed by a Standard Bank-led joint venture, is unique in that it brings together commercial banks with international development agencies to provide long-term finance through a structure said to be a first for Africa.

The UK government's international development department sponsored the fund, putting in 100m of equity capital.

This has been geared up with loans from Dutch, SA and German agencies, which committed a total of $85m, while Standard Bank and Barclays Bank committed $60m each.

There are plans to bring in more private sector players to take the fund up to $450m.

Though there are several international and SA banks that finance projects in Africa, most are hard currency earning resources projects in mining or oil and gas.

There is a shortage of private-sector debt finance for much-needed projects such as water supply or road building, since capital markets are poorly developed in many African countries and foreign banks are usually reluctant to lend for terms longer than five years.

The new fund will provide finance for terms of up to 15 years to commercially viable private sector infrastructure projects in 44 countries. SA and Mauritius are excluded thanks to their well-developed capital markets.

The fund will focus on projects in power, telecommunications, transport and water, but would finance infrastructure to support the extractive mining industries.

It will finance medium to large projects or enterprises. The fund will seek to be co-financier with other international and regional lenders, making investments per transaction of $10m-30m.

Standard Bank project finance director David Munro said the fund intended to have a lasting effect on poverty elimination, creating the opportunity for R3,5bn of investment in providing infrastructure required for the success of Africa.

Munro said Standard's investment showed commitment by SA's business community to the African renaissance. Other commercial banks indicated interest in contributing.

The international development department, with the equity portion of the fund, would take the first hit if any of the projects defaulted.

The development finance institutions, which include the Development Bank of SA, Dutch agency FMO and German agency DEG, will hold the subordinated debt.

The two banks, Standard and Barclays, will hold the senior debt.

Last modified on Thursday, 17 April 2014 16:46