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A US$350 million deal to finance an 80 megawatt (MW) peat to power project in Rwanda, which will improve access to electricity for the three quarters of the country's population that is currently off the grid, has reached financial close.
The power plant, which is expected to increase installed capacity in Rwanda by 40%, will utilise the Country's significant peat reserves to improve the national installed generation capacity. Despite its status as one of Africa's fastest-growing economies, only 25% of Rwanda's population currently has access to reliable electricity.
The plant is being constructed in the Mamba Sector of Gisagara District, one of the most remote areas in Rwanda, and is expected to be completed within three years.
The Africa Finance Corporation is the Mandated Lead Arranger for the project debt, and has successfully arranged total senior debt facilities of US$245 million, contributing US$75 million in loans and providing an underwriting commitment of US$35 million.
Finnfund, a Finnish Development Finance Company, served as the lead arranger for total mezzanine debt facilities of US$35 million for the project. The other lenders are Eastern and Southern African Trade and Development Bank(TDB), African Export-Import Bank (Afreximbank), Export-Import Bank of India, and Rwanda Development Bank (BRD).
The project is sponsored by Hakan Madencilik A.S - an energy company from Turkey, and Quantum Power - a power and energy infrastructure investment platform. Themis Infra, an infrastructure development firm, is the Project Development Manager.
Andrew Alli, CEO of AFC, commented on the announcement: "The move from costly external imports of fuel to more sustainable indigenous sources of energy such as peat will reap great rewards for Rwanda, not just in terms of the significant savings in foreign exchange hitherto used in importing expensive diesel oil for power generation, but also the positive economic and social benefits of providing more cost effective power for businesses and industries, as well as more affordable power for the people".
"AFC prioritises investing in projects that will have significant advantages for the local community, which this plant will. It will also make a huge contribution to powering Rwanda's economic growth in the future, in line with the government's objectives."
Rwanda aims to provide 70% of its 12 million people with power from the grid or off-grid by 2018, and the country intends to become a lower middle-income country by 2020
Africa Finance Corporation (AFC), a leading pan-African multilateral development finance institution and project developer, has issued its maiden Sukuk, the highest-rated ever Sukuk issuance from an African institution.
Following high levels of investor interest, the initial target of US$100 million was more than twice oversubscribed, resulting in the transaction being upsized to US$150 million and a final order book of approximately US$230 million. In addition to being the first Sukuk transaction of 2017, it is also the first Sukuk to be issued by an African supranational entity.
The Sukuk is AFC's second foray into Islamic finance; the corporation accepted a US$50 million 15 year line of financing from the Islamic Development Bank (IDB) in 2015 to finance Islamic Finance-compliant projects located across the numerous African IDB member countries. The privately placed 100% Murabaha Sukuk, which has been awarded an A3 senior unsecured rating by Moody's Investors Service, has a three year tenor and will mature on 24 January 2020. Emirates NBD Capital, MUFG and RMB acted as Joint Bookrunners and Joint Lead Managers with Emirates NBD Capital also acting as the Sole Global Coordinator.
Andrew Alli, President and CEO of AFC, commented on the announcement: "The core values of Islamic finance, the need to invest ethically in assets that have a tangible positive social impact, made a Sukuk issuance a natural choice for us. We offer global investors the chance to be involved in high-impact infrastructure projects that not only promote social and economic development across Africa but also generate economic returns for our investors.
"This Sukuk represents a milestone in our financing activities, a milestone that will enable us to further diversify our funding sources, to build new relationships with key investors in international markets and help us diversify our portfolio of projects to continue delivering real impact across the continent."
Ahmed Al Qassim, CEO of Emirates NBD Capital, added: "Emirates NBD Capital is delighted to have supported the inaugural US$150 million 3 year Sukuk issuance. The successful completion of the transaction is a testament to AFC's standing with the international investor community and AFC's commitment to develop new sources of funding.
"As the Sole Global Coordinator for the Sukuk, Emirates NBD Capital continues to lead the development of international Sukuk as a product and providing our clients with unique solutions to meet their funding requirements."
AFC has a diverse funding base, with a range of funding from sources across different markets. Last year the corporation issued its debut Swiss Franc denominated long three-year bond, raising CHF 100 million, and accepted a US$150 million 15 year loan facility from KfW Development Bank. In 2015 AFC's inaugural 144A/Reg S, US$750 million 5-year international bond was more than six times oversubscribed at over US$4.7 billion, attracting institutional investors from across Asia, Europe, Middle East and the United States.